Recession fears grow in wake of rate hikes

<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 global markets are shuddering today as the Fed's rate hike has been followed by other central banks, and investors worry that the very sharp rises in interest rates will bring recession. Most benchmarks are falling.</p><p>But first, initial American <a href="https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20221227.pdf" target="_blank"><strong>jobless claims rose</strong></a> last week from the prior week but the rise was minor - and it was less than expected. There are now 1.27 mln people on these benefits, also a weekly rise, but in turn also near their all-time lows.</p><p>However both <a href="https://www.census.gov/construction/nrc/pdf/newresconst.pdf" target="_blank"><strong>housing starts</strong></a> and new residential building consents fell sharply in May, even as completions jumped to an all-time high. Now both consents and starts are below year-ago levels.</p><p>US <a href="https://www.freddiemac.com/pmms" target="_blank"><strong>mortgage rates are rising fast</strong></a> again, and their benchmark 30yr rate is threatening 6% all of a sudden. These rates are now at their highest since just before the GFC in 2008.</p><p>And the <a href="https://www.philadelphiafed.org/-/media/frbp/assets/surveys-and-data/mbos/2022/bos0622.pdf?la=en&hash=E8C930C0ADE3186276AF79156B8CF4E8" target="_blank"><strong>Philly Fed factory survey has turned negative</strong></a> in June. The indicators for current activity and new orders dived, and the shipments index also fell but remained positive. However, firms reported continued increases in employment. Both price indexes declined but remained elevated. Expectations for growth over the next six months deteriorated, as the future general activity, new orders, and shipment indexes fell sharply.</p><p>Meanwhile a <a hr