Inflation up, asset prices down

<p>Kia ora,</p><p>Welcome to Monday’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 last week's Wall Street selloff looks like it will resume this week.</p><p>We get a dairy auction again this week on Wednesday morning after another RBA review tomorrow. We also get rate reviews in Canada, India and Brazil this week.</p><p>Then the US and China will be releasing inflation and foreign trade data. Other important data to follow include US consumer confidence, UK October GDP data, German investor sentiment and factory orders, Japan current account and producer prices, and Indian industrial output.</p><p>Most of this recent data is expected to be reasonably positive. But investors are focused what is coming - and see inflation, and central banks winding up to hike rates sooner than previously assumed, and reduce QE imminently. The punchbowl is about to be taken away, or at least down-sized. That means the pressure on asset price inflation is waning. And that means investors are facing revaluation losses even if businesses aren't facing reduced trading profits.</p><p>Over the weekend, the rise in <a href="https://www.bls.gov/news.release/empsit.nr0.htm" target="_blank"><strong>US non farm payrolls for November</strong></a> was a sharp disappointment, with the headline number rising just +210,000 when a rise of +550,000 was expected. It is the lowest monthly rise of 2021.</p><p>However, average weekly hours worked rose. Their participation rate rose. Average weekly earnings in November were up +5.6% from a year ago, and that is above the 2021 average. None of this data really supports the weak payroll number reported.</p><p>The Fed is likely to overlook these headline jobs numbers.</p><p>US factory orders were reported +1.0% higher in October than September, and +17% above year ago levels.</p><p>And the widely-watched <a href="https://www.ismworld.org/supply-ma