Inflation hawks dominate

<p>Kia ora,</p><p>Welcome to Wednesday’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 bond market has bared its teeth overnight, egged on this time by a hawkish Fed.</p><p>But first up today, there was another dairy auction this morning - and another overall dip in prices. There were down nearly -1.0% in USD terms, and down a massive -3.8% in NZD terms. And that is because of the other big economic move overnight - the rise of commodity currencies. We will come to that later, but the dairy price drop is largely due to the -1.5% fall in WMP prices, and in turn that is mostly about Chinese demand. The new difficulty shipping to China as it increasingly locks down is a part of that factor too.</p><p>But the auction also delivered higher prices for SMP, BMP, and cheese. These are key to the foodservice and ingredients business, and are benefiting from the return of foodservice industries worldwide. Nothing in this auction is likely change any farmgate milk payout forecast, but it might boost Fonterra's earnings from the upweighted foodservice and ingredients business.</p><p>The American <a href="http://www.redbookresearch.com/8702.html" target="_blank"><strong>retail impulse</strong></a> quickened last week and it was already quite upbeat.</p><p>And the <a href="https://www.the-lmi.com/march-2022-logistics-managers-index-report.html" target="_blank"><strong>US Logistics Managers' Index</strong></a> reached another new high in March. Conditions have been booming in the American logistics sector, and the March result is an all-time record high. Previous highs have featured excessive imbalances and supply-chain problems. They haven't been resolved, but this report suggests things are starting to return to a better balance, just at a high level.</p><p>The US <a href="https://www.census.gov/foreign-trade/Press-Release/current_press_release/ft900.pdf" target=