Global recession fears grow

<p>Kia ora,</p><p>Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news the equity markets are still falling as investors worry that more Fed rate hikes will stunt economic activity everywhere.</p><p>But first, last week <a href="https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20220880.pdf" target="_blank"><strong>US jobless claims actually fell slightly</strong></a> to 191,000 (although most reports will focus on a seasonally adjusted rise). There are now 1.44 mln people on these benefits, a new modern low. As a proportion of their labour force, this is easily a new record low.</p><p>Meanwhile <a href="https://www.bls.gov/news.release/ppi.nr0.htm" target="_blank"><strong>American producer prices</strong></a> came in +11% higher in April than a year ago, showing how embedded inflation is in their costs now. However, the month-on-month rise indicates a small tailing off of the pressure.</p><p>The May USDA World Agricultural Supply and Demand Estimates (<a href="https://www.usda.gov/oce/commodity/wasde/wasde0522.pdf" target="_blank"><strong>WASDE</strong></a>) paint a picture of relentless food stress with lower production, holding demand, and higher prices. Wheat and corn stocks are falling. US beef production is expected to fall and prices rise. US dairy production is expected to be stable.</p><p>South of their border, Mexico's central bank <a href="https://www.banxico.org.mx/publications-and-press/announcements-of-monetary-policy-decisions/%7BD2DD420D-FEEB-C682-3621-46B2AC0CA13E%7D.pdf" target="_blank"><strong>raised</strong></a> its benchmark policy rate by another +50 bps to 7% overnight as expected. It was their eighth consecutive hike, bringing borrowing costs to the highest since February 2020.</p><p>China has <strong>said</strong> that it is about to close it borders and strictly limit the ability of its citizens to t