China loses momentum; Japan gains some

<p>Kia ora, </p><p>Welcome to Thursday'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 some relief the US didn't surprise with its inflation report.</p><p>American <a href="https://www.bls.gov/news.release/cpi.nr0.htm" target="_blank"><strong>CPI inflation for July</strong></a> was reported overnight at 5.4%, the same as for June. Components of their core inflation (that is, excluding food or petrol) slipped slightly to +4.3% for the year to July, raising the prospect that it may have peaked. But analysts say a retracing lower from here may take a long time</p><p>US <a href="https://www.fiscal.treasury.gov/reports-statements/mts/" target="_blank"><strong>Federal budget deficit in July</strong></a> came in at -US$302 bln, almost exactly as expected. That makes the deficit for the prior twelve months as -US$2.9 tln or -12.6% of <a href="https://fred.stlouisfed.org/series/GDP" target="_blank"><strong>GDP</strong></a>. In the equivalent 2020 year it was -16.1% of GDP so that is creditable progress over the past year. (The New Zealand Government deficit to June is still to be finalised, but on roughly the same basis as the US, it looks like it will come in as a deficit of about -3.3% of NZ GDP.)</p><p>There was a <a href="https://www.treasurydirect.gov/instit/annceresult/press/preanre/2021/R_20210811_2.pdf" target="_blank"><strong>US$59 bln auction for the US Treasury 10year Note</strong></a> overnight and the Fed took US$18 bln. The remaining US$41 bln attracted $108 bln in bids which was almost +20% more than for <a href="https://www.treasurydirect.gov/instit/annceresult/press/preanre/2021/R_20210712_4.pdf" target="_blank"><strong>the prior auction</strong></a> a month ago. This time the median yield was 1.32% pa compared to 1.31% at the last equivalent event.</p><p>China's <a href="http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/4314549/index.html" target="_b