US data highlights inflation but officials turn a blind eye; China gets more deflation, softer debt expansion; India exports rise; Aussie house building weak; UST 10yr at 4.05%; gold up yet again, oil lower again; AU$1 = 65.1 USc

​Here's our summary of key economic events overnight that affect New Zealand, with news inflation is getting entrenched in the US and policymakers are starting to look away from the threat under political pressure.

But first, US mortgage applications fell for a third consecutive week with both refinance and new home applications decreasing. This came even though benchmark 30 year mortgage rates fell too. But the overall activity level is significantly higher than at this time last year.

In New York state, factories there reported that their new order levels stopped falling. And they shipped more in the past month. That brought a good rebound in the New York Fed's Empire factory survey in October, making back September's drop and almost back to the August levels. One of the reasons respondents feel better about the situation is that their price increases are sticking and they are absorbing less of their tariff-tax cost increases.

Supporting that are two private CPI tracking services who say that consumer prices picked up even more in September, one even suggesting CPI inflation ran at over +6% in September.

And that inflation is rising is confirmed in the October Beige Book release today by the Fed. They noted tariff-induced costs were reported in all districts, as input costs increased at a faster pace due to both these higher import costs and the higher cost of services. Overall, they say American economic activity changed little on balance since the previous report, with three Districts reporting slight to modest growth in activity, five reporting no change, and four noting a slight softening. Consumer spending, particularly on retail goods, inched down in recent weeks.

Across the Pacific, China said its consumer prices stayed in mild deflation, now running -0.3% lower in September from a year ago. Beef and lamb prices are rising now, but milk prices are still falling.

Meanwhile Chinese producer prices, already in moderate deflation, eased back to a -2.3% decrease, from August's -2.9%.

China also released its monthly new yuan loan data overnight. They came in at almost ¥1.3 tln, double the unusually low August level but still short of the almost ¥1.5 tln expected. September's get a seasonal boost normally and those factors were evident this year too. But still, the latest level was lower than the ¥1.6 tln in September 2024. Credit demand remains slightly subdued.

India said its September exports rose +6.1% to US$36.4 bln, building on the August increase. Their exports to the US are only 20% of all their exports and less than half of those are caught up in punitive tariff-taxes. And even among those, it is the Americans paying, it seems.

The EU said their industrial production rose again August from a year ago. Although the rise was a modest +1.1% from a year ago, that is an inflation-adjusted 'real' gain. In fact, their have reported gains on that basis for the past seven consecutive months which is unusual for them. For the prior 38 months they consistently reported year-on-year decreases. It's a turn up they will take.

Here in Australia, the Westpac-Melbourne Institute Leading Index for Q3-2025 suggests that the Australian economy is only expanding at the long term trend pace, but the pace is picking up marginally. They expect 2025 to come in below trend, but 2026 to edge up to trend levels.

And staying local we fell almost -66,000 homes short in the year to June of the aspirational +240,000 new homes built needed to the Government's target of 1.2 million new homes in the five years to 2029. That's a -27% shortfall in year one, not a great start because it is actually the weakest annual rise in three years. A shortfall like this will underpin prices for existing houses and make housing sharply less affordable.

The UST 10yr yield is now at 4.05% and up +2 bps from this time yesterday. The key 2-10 yield curve is now at +53 bps. Their 1-5 curve is positive by only +1 bp now. And their 3 mth-10yr curve is now -6 bps inverted. The China 10 year bond rate is unchanged at 1.76%. The Australian 10 year bond yield starts today at 4.24%, down -1 bp from yesterday. 

Wall Street has made another small gain today with the S&P500 up +0.3%. European markets were mostly lower by -0.3% except Paris which jumped +2.0%. Tokyo ended its Wednesday up +1.8%, Hong Kong was also rose +1.8%, and Shanghai was up +1.2%. Singapore gained a minor +0.3%. Locally, the ASX200 rose a full +1.0%. 

The price of gold will start today at US$4196/oz, up +US$52 from yesterday.

American oil prices are little-changed at just under US$58.50/bbl, with the international Brent price now just over US$62/bbl.

The Australian dollar is at just on 65.1 USc, up +10 bps from yesterday. Against the Japanese yen we are unchanged at ¥98.5. Against the euro we are also unchanged at 56 euro cents.

The bitcoin price starts today at US$110,890 and down another -1.5% from this time yesterday. Volatility over the past 24 hours has been modest at just over +/- 1.3%.