'Good' news 'bad' for stock markets

<p>Kia ora,</p><p>Welcome to Thursday’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>And today we lead with news that high bond yields are rattling international equity markets. 'Good' economic news is currently 'bad' for market prices because it brings expectations the monetary authorities will keep raising interest rates.</p><p>But first, US <a href="https://www.mba.org/news-and-research/newsroom/news/2023/02/22/mortgage-applications-decrease-in-latest-mba-weekly-survey" target="_blank"><strong>mortgage applications</strong></a> took another sharp dive last week, down -13% from the week before to be a stunning -72% lower than year ago levels. That was undoubtedly because benchmark mortgage interest rates jumped to 6.62% and their highest of the year so far. The American real estate market seemed to have effectively stalled.</p><p>Meanwhile, consumers have turned their attention to retail therapy. <a href="https://www.redbookresearch.com/" target="_blank"><strong>Same-store sales rose</strong></a> last week to be +5.3% higher than year-ago levels, roughly keeping pace with retail inflation, and bucking the idea than things are generally grim. It seems to be only their housing market that meets that criteria.</p><p>In Brazil, they are mobilising investigations into a <a href="https://www.gov.br/agricultura/pt-br/assuntos/noticias/caso-suspeito-de-encefalopatia-espongiforme-bovina" target="_blank"><strong>suspected case of mad cow disease</strong></a>. If Brazil suddenly stopped exporting beef, that would throw the international market into turmoil - and be inflationary everywhere else.</p><p>We noted yesterday that German business sentiment is improving, and <a href="https://www.ifo.de/fakten/2023-02-22/ifo-geschaeftsklimaindex-gestiegen-februar-2023" target="_blank"><strong>another widely-watch survey</strong></a> on that is out today confirming the trend, their most optimist