Inflation pressures ease globally

<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 price pressures seem to be easing in most economies - will they in New Zealand?</p><p>But first today, <a href="https://www.mba.org/news-and-research/newsroom/news/2023/04/19/mortgage-applications-decrease-in-latest-mba-weekly-survey" target="_blank"><strong>American mortgage applications</strong></a>, which had been rising in recent weeks, fell back sharply last week in an unexpected reversal. It seems the recent rises did not indicate a recovery. They were down -9% from the prior week and down -36% from the same week a year ago. There was a minor rise in the benchmark 30 year fixed mortgage rate to 6.43% plus points, but it seems hard to assign the reason to that. But with rates well above year-ago levels and with most on very long contracts, there is little refinance incentive in this market.</p><p>The US Fed's April <a href="https://www.federalreserve.gov/monetarypolicy/files/BeigeBook_20230419.pdf" target="_blank"><strong>Beige Book</strong></a> reviews describe an economy that is just chugging along at a moderate pace, nothing spectacular but now really slowing either. Consumer spending was flat, car sales steady, but lending volumes and loan demand were noted as lower. Their labour market showed a softer pace of growth and layoffs were concentrated in just a few industries they observed. Price increases "appeared to be slowing" the report noted. This has all the hallmarks of describing a 'soft landing'.</p><p>Wall Street is awash in earnings reports that don't suggest their economy is failing. But ratings agencies are on track to cut the most US corporate bonds to junk since the early part of the pandemic, boosting funding costs for some companies just as economic growth is slowing. Apart from the pandemic jolt, 2023 is on track to be the toughest on bond rat