The pace of US inflation cools slightly

<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 some inflation expectations are being reset in markets today.</p><p>The American inflation rate as measured by the <a href="https://www.bls.gov/news.release/cpi.nr0.htm" target="_blank"><strong>CPI</strong></a> came in as expected at +5.3% for August, unchanged from July. But their core inflation rate - without food or energy - came in lower than expected at 4.0% and that was not expected. There has been a noticed tailing off in August from July, and markets have reacted to this.</p><p>For a number of months now the American economic expansion has seemed to be building while the Chinese one falling away, which is a turnaround in fortunes. But now, the situation has a sense it is turning again. Certainly the latest update to their <a href="https://www.atlantafed.org/cqer/research/gdpnow" target="_blank"><strong>live GDP trackers</strong></a> shows a rather fast moderation underway in the US. The <a href="https://www.oecd.org/sdd/leading-indicators/composite-leading-indicators-cli-oecd-september-2021.htm" target="_blank"><strong>OECD</strong></a> is also suggesting something similar is happening.</p><p>Both the US CPI and economic expansion cooling are suggesting to markets that US Fed tapering may be a ways off yet, and that corporate earnings may not continue strongly. That has seen equity markets fall, the benchmark UST 10yr rate slip - and the price of gold rise.</p><p>Meanwhile in China, property giant Evergrande is <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0914/2021091400059.pdf" target="_blank"><strong>warning</strong></a> of the 'tremendous' financial pressure it is under. It's shares are sinking, taking others with it, and it has hired a restructuring team to guide it from here. Angry investors are besieging their headquarters because bond payments