Pandemic risks mount globally

<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 that behind the 'good' economic news are increasing signs the pandemic spread is corroding demand globally.</p><p>In the US the weekly <a href="https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20211532.pdf" target="_blank"><strong>jobless claims report</strong></a> was actually quite a good one with 'only' 308,000 new claims last week, its lowest level since the start of the pandemic in March 2020. There are now under 2.8 mln people on these benefits in a steady trend lower.</p><p>Also positive is that <a href="https://www.mba.org/2021-press-releases/august/mortgage-delinquencies-decrease-in-the-second-quarter-of-2021" target="_blank"><strong>mortgage delinquencies</strong></a> in the US are dropping to post-pandemic lows.</p><p>The Philly Fed <a href="https://www.philadelphiafed.org/surveys-and-data/regional-economic-analysis/mbos-2021-08" target="_blank"><strong>August survey</strong></a> brought a marginally downgraded sentiment result but new orders rose sharply. However firms still report supply bottlenecks and rising cost pressures, so sentiment is taking a hit over how they will get out of these pressures.</p><p>The turn lower in sentiment is also evident in financial markets with the US Treasury <a href="https://www.treasurydirect.gov/instit/annceresult/press/preanre/2021/R_20210819_3.pdf" target="_blank"><strong>30 year TIPS yield</strong></a> turning more negative than it was at the last equivalent auction in <a href="https://www.treasurydirect.gov/instit/annceresult/press/preanre/2021/R_20210218_3.pdf" target="_blank"><strong>February</strong></a>. At US$9 bln it is not a large event however.</p><p>But what is really turning financial markets lower is the pandemic situation in the US as delta infections start to over-run hospitals. The road ahead is pa