"The Budget we need"

<p>Kia ora,</p><p>Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/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 Australia gets "the Budget we need" rather than the one that just papered over their issues.</p><p>But first, American <a href="https://www.redbookresearch.com/" target="_blank"><strong>retail sales are holding</strong></a>, up +8.2% from a year ago on a same-store basis last week.</p><p>But US consumer sentiment is not holding. The widely-watched <a href="https://www.conference-board.org/topics/consumer-confidence" target="_blank"><strong>Conference Board survey</strong></a> has it dipping after two months of gains.</p><p>And nor is the next regional Fed factory survey, <a href="https://www.richmondfed.org/-/media/RichmondFedOrg/research/regional_economy/surveys_of_business_conditions/manufacturing/2022/pdf/mfg_10_25_22.pdf" target="_blank"><strong>this one</strong></a> from the Richmond Fed in the mid-Atlantic states region. They are continuing to report weaker conditions as they have done most of the year, with little supply-chain relief.</p><p>In China, their slowdown is expected to push the state budget to a -US$1 tln deficit. That would be -5.5% of GDP and similar to the American one.</p><p>In Japan, most <a href="https://www.boj.or.jp/en/research/brp/fsr/data/fsr221021a.pdf" target="_blank"><strong>banks and insurers face currency losses</strong></a> from their giant holding of US Treasuries. They are no longer buyers. In turn, that is putting upward pressure on US yields for these benchmark bonds.</p><p>The <a href="https://www.ifo.de/fakten/2022-10-25/ifo-geschaeftsklima-weiter-schlecht-oktober-2022" target="_blank"><strong>Ifo Business Climate indicator</strong></a> for Germany edged lower to 84.3 in October, the weakest since May 2020, compared to an upwardly revised 84.4 in September. Still, this new level was not as bad as expected. Winter recession is com