UK financial markets suffer strange own-goal

<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>Today we lead with news markets remain glued to the car-crash that is happening in UK financial markets, even if the global implications are limited.</p><p>Separately, US <a href="https://www.mba.org/news-and-research/newsroom/news/2022/10/12/mortgage-applications-decrease-in-latest-mba-weekly-survey" target="_blank"><strong>mortgage applications fell</strong></a> -2.1% last week in an extended downward trend. They are a massive -40% lower than the same week a year ago. That is largely because mortgage interest rates keep on rising, topping 6.8% last week and the highest since 2006.</p><p>The American <a href="https://www.bls.gov/news.release/ppi.nr0.htm" target="_blank"><strong>producer price index went up</strong></a> +0.4%in September from August, the first increase in three months. Year-on-year it is up +8.5% which is a lesser rise than for August.</p><p>The release of the <a href="https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20220921.pdf" target="_blank"><strong>US Fed minutes</strong></a>, always keenly awaited, has brought no ructions in financial markets today, so far at least. The document itself reveals that their policy makers have judged that the cost of too little action outweighs costs of too much - the American version of a 'least regrets' policy.</p><p>Japan's <a href="https://www.esri.cao.go.jp/en/stat/juchu/2022/2208juchu-e.html" target="_blank"><strong>machinery orders</strong></a> had their biggest single-month fall in six months in August, falling almost -10% from July even though they are up almost +3% from the same month in 2021. The global economic slowdown and a weaker yen both are weighing on local corporate spending now.</p><p>Japanese <a href="https://www.jmtba.or.jp/wp-content/uploads/sokuhou2209vbmfj.pdf" target="_blank"><strong>machine tool orde