Price rise expectations spread

<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 of more indications price rises are spreading.</p><p>But first in the US, they <a href="https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20210884.pdf" target="_blank"><strong>reported</strong></a> a good reduction in the number of jobless claims for last week, even less than the decline expected. There are now 3.7 mln people on these benefits and back to a similar level a year ago, just as the pandemic was threatening to bite. But it is still twice as high as the pre-pandemic levels.</p><p>And staying in the US, <a href="https://www.bls.gov/news.release/ppi.nr0.htm" target="_blank"><strong>producer prices are up</strong></a> +6.2% in April from a year ago, a sharp rise from the already-high +4.2% gain they reported for March. Prices are rising fast, in ways that seem temporary, yet this could change expectations in ways that are self-reinforcing.</p><p>Consumer prices are getting <a href="https://www.reuters.com/business/energy/drivers-struggle-find-fuel-us-southeast-pipeline-begins-restart-2021-05-13/" target="_blank"><strong>no respite</strong></a> in the US following the oil pipeline hack there. Temporary sure, but it is feeding rising price expectations. Still, Fed officials don't see the pressures embedding.</p><p>There was another big US Treasury bond issue today, this time for <a href="https://www.treasurydirect.gov/instit/annceresult/press/preanre/2021/R_20210513_3.pdf" target="_blank"><strong>US$44 bln for their 30 year maturity</strong></a>. US$14 bln was allocated to the US Fed. The median yield was 2.315% compared to the <a href="https://www.treasurydirect.gov/instit/annceresult/press/preanre/2021/R_20210311_3.pdf" target="_blank"><strong>same issue a month ago</strong></a> at 2.23% pa. This one wasn't quite as popular with 'only' US$74 bln being bid</