China's exports soar while US exports shrink; India inflation falls below target; Nobel Prize in economics 'proves' creative destruction long term benefits; UST 10yr at 4.07%; gold leaps again, oil little-changed; AU$1 = 57.4 USc

​Here's our summary of key economic events overnight that affect Australia, with news Trump (and Vance) are attempting to roll-back their aggression in the face of ugly financial market reactions and firm Chinese pushbacks. That cheered Wall Street and American investors, but others are watching the risks mount and have pushed precious metals prices up sharply.

Meanwhile, China said their exports rose +8.3% in September from a year ago. This is faster expansion that the +4.4% August growth, and took the monthly level to US$329 bln the most in seven months. And this was despite a -27% slump in exports to the US. The exports grew modestly to Japan and Korea, but to some key markets they rose more than +10%, like to Taiwan (+11%), ASEAN countries (+14%), the EU (+14%), and Australia (+11%). It is a pretty impressive performance, it has to be said.

Of course, we don't have any American data to compare it with, their last data for August showed their exports fell -1.4% from a year ago. American disengagement is a unique opportunity for China who so far are a net winner.

And it may get worse for the US. Their farm products are being substituted by other markets (Australia is a winner), and China's rare-earth export restrictions will put a growing share of American technology in a tough spot. Of course, it may also drive innovation to other components but so far there is little evidence of that happening at the scale needed. American companies seem to just be waiting for another TACO moment.

It is not all good in China. A new survey of local economists points out a clear slowing.

In India, their CPI inflation fell to 1.5% in September, down from 2.1% in August and below the expected 1.7%. This is their lowest inflation rate since June 2017. It is also below their central bank's 2% lower tolerance limit under its inflation-targeting framework. Leading the rate lower were food prices that fell -2.3%, the largest decline since a record -2.7% fall in December 2018.

This year's Nobel Prize in Economics has been awarded to three economists (Israeli, French, Canadian) whose investigations showed that sustained economic growth does in fact come from innovation and 'creative destruction'.

In the US, American corporate bond markets are hearing increasing numbers of stories about bond risks and bond collapses, like this one. Involved are some good-sized 'middle' companies (huge by NZ standards). Billion-dollar companies like Saks, New Fortress Energy, Tricolor, and the latest, First Brands (of Fram oil filter and Autolite spark plug fame). A key feature of these collapses is the speed at which they went from 'trading' to 'bust'. It is unnerving some on Wall Street.

The UST 10yr yield is now at 4.07% and up +2 bps from this time yesterday. The key 2-10 yield curve is now at +55 bps. Their 1-5 curve is still positive by only +3 bps. And their 3 mth-10yr curve is now -2 bps inverted. The China 10 year bond rate is down -9 bps at 1.77%. The Australian 10 year bond yield starts today at 4.29%, down -8 bps from yesterday. 

Wall Street has roared back today with the S&P500 up +1.6%, an outlier in global markets. European markets were higher too but not showing the same enthusiasm, up +0.2% although Frankfurt was up +0.6%. Tokyo ended its Monday down -1.0%, Hong Kong was down -1.2%, and Shanghai dipped -0.2%. Singapore fell -0.8%. Locally, the ASX200 also fell -0.8%.

The price of gold will start today at US$4110/oz, up +US$94 from yesterday. (Silver is now just under US$52/oz, up proportionately more, but that may have more to do with a short squeeze in the London market.)

American oil prices are up +50 USc at just on US$59.50/bbl, with the international Brent price now just under US$63.50/bbl.

The Australian dollar is at just over 65.2 USc, little-changed from yesterday. Against the Japanese yen we are up +40 bps at ¥99.3 AUc. Against the euro we are up +30 bps at 56.3 euro cents.

The bitcoin price starts today at US$114,683 and up +0.4% from this time yesterday. Volatility over the past 24 hours has been low at just under +/- 0.9%.