Yields tumble in anticipation of slowdown, but data still resilient

<p>Kia ora,</p><p>Welcome to Friday’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 markets are pricing much lower yields for NZ Government bonds, partly in response to international market shifts.</p><p>But first, the turn in US economic fortunes still hasn't shown up in their <a href="https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20230082.pdf" target="_blank"><strong>weekly jobless claims data</strong></a>. They came in low last week and lower than expected. There are now 1.9 mln people on these benefits.</p><p>But weaker conditions are showing up in more factory data. However the Fed's monthly <a href="https://www.federalreserve.gov/monetarypolicy/beigebook202301.htm" target="_blank"><strong>Beige Book surveys</strong></a> came in less negative than expected, noting "moderate to modest" expansions across the country, in their labour markets, and for prices.</p><p>The Philadelphia Fed's <a href="https://www.philadelphiafed.org/surveys-and-data/regional-economic-analysis/mbos-2023-01" target="_blank"><strong>updated survey</strong></a> stayed slightly negative in January, although less so than for the prior month.</p><p>American <a href="https://www.census.gov/construction/nrc/pdf/newresconst.pdf" target="_blank"><strong>building consent and housing start data</strong></a> were both slightly lower in December, but not significantly so. Essentially they are both settling out at pre-pandemic levels.</p><p>The latest data on <a href="https://home.treasury.gov/data/treasury-international-capital-tic-system" target="_blank"><strong>long term investment flows</strong></a> in and out of the US shows larger inflows than were expected in December, and for the year.</p><p>It is tough being a bear on the US economy.</p><p>But you are being helped by Republicans in Congress who are refusing to pass a budget resolution. The US Treasury has <a hre