Iron ore price slumps as China re-prioritises

<p>Kia ora, </p><p>Welcome to Friday'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 markets are quite while the norther hemisphere in on vacation. But China is taking the opportunity to adjust.</p><p>However, first in the US, <a href="https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20211497.pdf" target="_blank"><strong>jobless claims</strong></a> came in as expected at 320,000 new applicants, taking the total on these benefits to 2.8 mln. This latest data is neither an improvement nor a deterioration but there is still a long way to go until you can say their labour market has recovered.</p><p>American <a href="https://www.bls.gov/news.release/ppi.nr0.htm" target="_blank"><strong>producer price inflation</strong></a> in July rose and by more than expected. It was running at +7.3% in June and a similar level was expected in July. But what was reported was +7.8%. Core PPI jumped from 5.6% in June to 6.2% in July and even faster increase.</p><p>The USDA is <a href="https://www.usda.gov/oce/commodity/wasde/wasde0821.pdf" target="_blank"><strong>forecasting</strong></a> tighter grain supply in the year ahead as northern hemisphere heat stunts output, higher beef prices, higher imports by the US, but also lower US dairy prices.</p><p>There was a US$39 bln <a href="https://www.treasurydirect.gov/instit/annceresult/press/preanre/2021/R_20210812_3.pdf" target="_blank"><strong>US Treasury 30yr bond auction</strong></a> overnight where the Fed took US$12 bln. The balance was reasonably popular, attracting US$59 bln in bids. But at 1.96% median yield, it wasn't much advance on the 1.90% of the <a href="https://www.treasurydirect.gov/instit/annceresult/press/preanre/2021/R_20210713_3.pdf" target="_blank"><strong>prior equivalent auction</strong></a> a month ago.</p><p>Also overnight, the Mexican central bank <a href="https://www.banxico.org.mx/publications-