Chances of more rate rises recede

<p>Kia ora,</p><p>Welcome to Thursday’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>And today we lead with news that in the shadow of the sudden geopolitical risks in Gaza, economic markers are generally positive. But the chances of more rate rises seem to be receding.</p><p>US <a href="https://www.mba.org/news-and-research/newsroom/news/2023/10/11/mortgage-applications-increase-in-latest-mba-weekly-survey" target="_blank"><strong>mortgage applications</strong></a> were steady last week, little-changed from the prior week so still -19% lower than year-ago levels, which was when the down-trend started biting hard. Meanwhile their benchmark 30 year mortgage interest rate rose to 7.67% and a new high since 2000.</p><p>American <a href="https://www.bls.gov/news.release/ppi.nr0.htm" target="_blank"><strong>producer prices</strong></a> came in just +2.2% higher than year ago levels in September. This was up marginally from August and analysts had expected a small slip. They rose +0.5% from the prior month however, the least in three months, following a +0.7% rise in August. Goods prices were up +0.9%, mainly because petrol jumped +5.4%.</p><p>The US Fed released the <a href="https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20230920.pdf" target="_blank"><strong>minutes</strong></a> of its September 21 meeting today. That showed a new but small disagreement on the rate hold decision, although all voting members were agreed. Several want to shift the focus of decisions to how long to keep rates high, rather than how high to raise them. But all indications are that there will be no change again in November. There was little initial market reaction to this release.</p><p>Across the Pacific, Japanese <a href="https://www.jmtba.or.jp/wp-content/uploads/sokuhou2309wsvjn.pdf" target="_blank"><strong>machine tool orders</strong></a> rose sharply in September from August even th