Here's our summary of key economic events overnight that affect Australia, with news the price of gold is falling, long term benchmark interest rates keep on rising with larger risk premiums, and monetary policy regulators are coming round to the idea of rate cuts to bolster flagging economic expansion everywhere.
But first in the US, mortgage application volumes rose marginally last week from the prior week and holding on to the +11% jump of the previous period. Benchmark home loan rates were basically stable but at an elevated level averaging 6.86%.
Canada building consents fell in March and by more than expected although to be fair it only cancelled the February rise and probably isn't too surprising given their election campaign and overall economic uncertainty around relations with the US.
Meanwhile, Canadian vehicle sales took off in March, and to its best month since the pandemic, as buyers rushed to get hold of pickups, utes and light trucks ahead of the threat of sharply higher prices. On the other hand, car sales dived.
In China, new yuan loan approvals were unusually weak in the April data released overnight. Banks approved loans at their lowest rate for an April since 2005, and at ¥280 bln, that was less than 10% of the good March level and less than half the year ago level, itself unusually weak. Of course, it reflects the initial impact of the trade war on Chinese businesses.
In Australia we should note that large parts of Victoria and South Australia are in a severe drought condition, also even parts of Tasmania. Some say it is the worst "in a lifetime" with zero April rainfall extending into May. If there is any hope for livestock farmers it is that grain production has been high in other areas, enabling grain-fed beef to continue. Lucky for them, grain-fed beef demand is rising in China. Those drought conditions contrast with the endless rain Sydney is having.
Next week on Tuesday, the Aussie central bank will be reviewing its 4.10% cash rate target. More analysts now see a -25 bps cut then. Although it is no certainty, financial markets also have it priced in.
And staying in Australia, regulator ASIC is tackling Macquarie again. ASIC is suing Macquarie Securities alleging it engaged in misleading conduct by misreporting millions of short sales to the market operator for over 14 years. They allege that between 11 December 2009 and 14 February 2024, Macquarie failed to correctly report the volume of short sales by at least 73 million. ASIC estimates that this could be between 298 million and 1.5 billion short sales. The last ASIC action against Macquarie was just a week ago over compliance failures. This latest action is the fifth by ASIC against Macquarie since April 2024.
The UST 10yr yield is at 4.53%, up +3 bps so far today. The key 2-10 yield curve is still at +48 bps. Their 1-5 curve is now positive by +2 bps. And their 3 mth-10yr curve is more positive at +20 bps. The Australian 10 year bond yield starts today at 4.57% and up +10 bps from yesterday. The China 10 year bond rate is unchanged at 1.68%. The NZ Government 10 year bond rate is up +2 bps at 4.64%.
But Wall Street is marking time today, essentially unchanged in Wednesday trade, running out of puff and down from its +0.3% rise at its open. Overnight, European markets were mostly -0.5% lower. Yesterday Tokyo ended down -0.1%, Hong Kong rose +2.3% and Shanghai was up +0.9%. Singapore rose fell -0.7%. The ASX200 ended its Wednesday session up a minor +0.1% but the NZX50 fell a minor -0.1%.
The price of gold will start today at US$3175/oz, and down -US$67 from yesterday.
Oil prices are marginally lower today at just under US$63.50/bbl in the US and the international Brent price is just under US$66.50/bbl.
The Aussie dollar is now at 64.4 USc, down -30 bps from yesterday at this time. Against the yen we are down -100 bps at 94.3 yen Against the Kiwi we are up +10 bps at 108.9 NZc. Against the euro we are down -30 bps at 57.5 euro cents.
The bitcoin price starts today at US$103,147 and down almost -1.0% from yesterday. Volatility over the past 24 hours has remained modest at just under +/- 1.1%.