Investors turn wary about what lies ahead

<p>Kia ora,</p><p>Welcome to Thursday'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 the steady rise in the US economy continues.</p><p>But investors seem ambivalent about the progress, and are not convinced the inflationary pressures will last and result in higher interest rates.</p><p>The US Fed has released its latest update of economic conditions across all its regions in its <a href="https://www.federalreserve.gov/monetarypolicy/files/BeigeBook_20210602.pdf" target="_blank"><strong>Beige Book</strong></a>. Their overall economy was said to be expanding at a faster rate than a month ago, and now at a "moderate pace". This was helped by increased vaccination rates and relaxed social distancing measures, while they also noted the adverse impacts of supply chain disruptions.</p><p>Selling prices rose moderately they said, while input costs rose more briskly. Continuing supply chain disruptions intensified cost pressures. Strong demand, however, allowed some businesses, particularly manufacturers, builders, and freight companies, to pass through much of the cost increases to their customers. Looking forward, the survey did see more cost increases and higher prices in coming months.</p><p>Meanwhile, Fed speakers are floating the idea that <a href="https://www.philadelphiafed.org/community-development/workforce-and-economic-development/210602-women-in-housing-and-finance" target="_blank"><strong>tapering</strong></a> is on its agenda.</p><p>The <a href="https://www.mba.org/2021-press-releases/june/mortgage-applications-decrease-in-latest-mba-weekly-survey" target="_blank"><strong>steady decrease</strong></a> in US mortgage applications continued last week, and it is becoming quite the trend. And it is not due to <a href="http://www.freddiemac.com/pmms/" target="_blank"><strong>mortgage rates</strong></a> rising recently. It is "rapidly rising home prices" that are