Market sentiment improves

<p>Kia ora, </p><p>Welcome to Wednesday'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 there has been a risk sentiment improvement in markets, but most markets are shallow with light volumes during this northern hemisphere summer holiday period.</p><p>But first, we should note that the US Senate has now finally passed a <a href="https://www.reuters.com/world/us/whats-us-senates-bipartisan-1-trillion-infrastructure-bill-2021-08-03/" target="_blank"><strong>US$1 tln infrastructure package</strong></a> that is a top priority for the US Administration, a bipartisan victory that could provide the nation's biggest investment in decades in roads, bridges, airports and waterways. The vote was 69-30 in the 100-seat chamber, with 19 Republicans voting 'yes'. (There <i><strong>is</strong></i> debate about how large the approved Plan actually is.) Immediately after that vote concluded, Senators pushed ahead with a follow-up US$3.5 tln spending package that Democrats plan to pass even without Republican votes.</p><p>American <a href="https://www.bls.gov/news.release/prod2.nr0.htm" target="_blank"><strong>labour productivity</strong></a> improved in the June quarter according to official stats, but the gains were less than expected. It rose +2.3% as output increased +7.9% and hours worked increased +5.5%. A gain of +3.5% was expected and that was less than the actual Q1 gain of +4.3%. So in their terms, this is quite a miss.</p><p>There was another US Treasury 3yr bond auction overnight and this one brought a higher yield than the month-ago event. </p><p>In China, even though the country is on summer holidays, the <a href="http://www.dce.com.cn/DCE/Products/Industrial/Iron%20Ore/index.html" target="_blank"><strong>iron ore price</strong></a> continues its downward track. Corn and rice prices are falling now too.</p><p>In Germany, <a href="https://www.zew.de/en/press/latest-pr