Drought to affect ship freight rates

Kia ora,Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news global financial markets await signals from Jackson Hole at the weekend.In the meantime in the US, there was an unusual surge in retail sales at bricks & mortar stores last week, reporting their strongest week-on-week gain in four months (+2.9% from a year ago). And it is the first time that rise has matched inflation in 2023.But US existing home sales came in very sluggish. The American housing market remains in the doldrums, with an annualised sales rate of 4.07 million units in July 2023, the lowest level since January and below market expectations of 4.15 million. That's more than -16 % below year-ago levels. They have 14 weeks of unsold inventory on hand now. Higher mortgage rates and limited inventory continued to be the main factors behind the decline with sellers not really interested in participating in a falling market.'Sluggish' is also the word to describe the next regional factory survey, this one from the Richmond Fed in the mid-Atlantic states region. But more measures 'improved' including for new orders, even if the 'improvement' is just a lesser decline in this region. Interestingly however, this is another region where manufacturers are looking ahead to much better outcomes, so are still hiring and investing.And staying in the US, S&P has followed Moody's in trimming the ratings of a set of regional banks. Many depositors have "shifted their funds into higher-interest-bearing accounts, increasing banks’ funding costs," S&P wrote in a note summarising the moves. "The decline in deposits has squeezed liquidity for many banks while the value of their securities, which make up a large part of their liquidity, has fallen." Federally insured banks were sitting on more than US$550 bln in unrealised losses on their available-for-sale and held-to-maturity securities as of mid-year, S&P said.South in Panama, they have a persistent drought, and it is one that in affecting ships in the Panama Canal. Ships must now enter only part-loaded to navigate the lower water levels, and the average wait time to enter is now more than 80 hours, more than double the usual wait time. That will have a significant impact on trade and freight rates you would assume.Across the Pacific, given all the challenges the country faces, within and from its northern neighbour, it is perhaps surprising that consumer sentiment is holding up very well in South Korea, better than analysts had expected. The results of their business sentiment survey will be released later today.As you will note in the next item, the benchmark UST 10yr has recently risen sharply to a new 'recent high'. But we should keep in mind that this is still well below the long-run average for this rate, which over the past 60 years was 5.88%. From 1963 until the end of 1979 the average was 6.31%. From 1980 for the next 20 years it was 8.62%. For the subsequent ten years until the end of 2009 it was 4.46%. And for the 13 years since, i