Investors ignore background rumbles

<p>Kia ora,</p><p>Welcome to Tuesday's Economy Watch where we follow the economic events and trends that affect 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 Wall Street and EU equity markets are trying to look past a Chinese rout and some dodgy local data.</p><p>US <a href="https://www.census.gov/construction/nrs/pdf/newressales.pdf" target="_blank"><strong>new home sales</strong></a> had a terrible month in June, made worse by a revision lower of their May data. June sales were the least for any month in more than a year and came in far below what was expected. New home sales make up less than 10% of all home sales, but it is a corner of their market that is a bellwether. Some see supply-chain shortages behind these drops and if that proves to be the case, the downturn could be just temporary.</p><p>Meanwhile the latest Fed regional factory survey, <a href="https://www.dallasfed.org/research/surveys/tmos/2021/2107.aspx" target="_blank"><strong>this one</strong></a> from Texas in July brought more stable news with only a small drift off its quite strong June expansion. New order levels remained good, and the usual indicators about strong cost pressures were in this report too as "strongly elevated".</p><p>There was another large US Treasury bond auction earlier today, this one for its 2 year Note. <a href="https://www.treasurydirect.gov/instit/annceresult/press/preanre/2021/R_20210726_3.pdf" target="_blank"><strong>This one</strong></a> was for US$66 bln offered of which the Fed took US$6 bln. The balance got US$148 bln in bids (although that was less than the US$152 bln in bids at <a href="https://www.treasurydirect.gov/instit/annceresult/press/preanre/2021/R_20210622_2.pdf" target="_blank"><strong>the equivalent auction a month ago</strong></a>). The resulting median yield was 0.18% pa, compared to 0.22% last time.</p><p>The extensive flooding in China has probably <a href="https://www.caixinglobal.com/2021-07-26/cover-story-how-hi