Markets nervous ahead of Fed decisions

<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>And today we lead with news both equity and bond markets are displaying some nerves ahead of tomorrow's US Fed rate and policy decisions.</p><p>But first, there was another <a href="https://www.globaldairytrade.info/en/product-results/" target="_blank"><strong>dairy auction</strong></a> overnight and a good gain was achieved even if not as strong as some market forecasts expected. Overall prices were up +4.6% in US dollar terms on top of the prior event's +2.7%. In NZD terms the increase was a lesser +3.7%. WMP rose +4.6% from the last event, SMP was up +5.4% and butter up +3.8%. But cheddar cheese fell -1.7%. These are positive signals and momentum going into tomorrow's Fonterra result announcements, but we need to keep in mind even after these rises, overall prices are still -24% lower than year-ago levels and the recent rises only take them back to early August levels. This event is a positive sign, but will hardly move the needle on milk payout forecasts. <a href="https://mcusercontent.com/b8a03199b83b7d3f31d0f2086/files/cd91665a-d9bf-a9c6-8224-648f48e4f46b/GDT_340.pdf" target="_blank"><strong>More here</strong></a>.</p><p>In the US, residential <a href="https://www.census.gov/construction/nrc/pdf/newresconst.pdf" target="_blank"><strong>building consents rose</strong></a> rather sharply in August, but <a href="https://www.census.gov/construction/nrc/pdf/newresconst.pdf" target="_blank"><strong>housing starts fell</strong></a> sharply, and it is the falling starts data that is getting all the headlines. With more applications to build being approved, the fall in housing starts might be just temporary.</p><p>US <a href="https://www.redbookresearch.com/" target="_blank"><strong>retail sales</strong></a> at brick & mortar stores on a same store basis were up +3.6% last week from a year ago,