US data sparse and weak as US shutdown extends; risks from non-bank lending highlighted; Shanghai property sales jump; aluminium prices surge; UST 10yr at 3.95%; gold drops again, oil up; AU$1 = 64.9 USc

Here's our summary of key economic events overnight that affect Australia, with news the US federal Government shutdown is now the second longest in their history having just overtaken the 1995-96 one where Republicans were trying to prevent a Clinton budget being passed. The longest was the 2018-19 one induced by Trump. The current one has seen about 1 mln federal workers stood down, and that is the largest of this type of impact. If this one runs another two weeks it will then become their longest.

Separately, US mortgage applications inched lower last week although it was their fourth consecutive weekly decline. The weakest part of these mortgage applications are those to buy a new home. This came despite benchmark 30 year mortgage interest rates falling again and back near their one-year lows.

There was another US Treasury bond auction overnight, this one for their 20 year Note. It drew is normal modest support, and delivered a median yield of 4.46%, down from the 4.56% at the prior equivalent event a bit more than a month ago.

Ratings agency Moody's is pointing out that the rise of non-bank debt providers are building stress into the global financial system. Loans to non-depository financial institutions (NDFIs) are now 10.4% of total bank loans, nearly three times the 3.6% exposure a decade ago they said. It is aggressive growth that has outpaced all other lending activities since 2016.

Japanese exports rose in September from August, but their imports jumped more than expected and catching analysts a bit by surprise. Basically they are now at the same level, oscillating around balance, as was expected. But some observers cheered that this result indicated Japanese consumer demand was improving.

The Indonesian central bank reviewed its policy rate overnight and left it unchanged at 4.75%, surprising observers who had expected and priced in a -25 bps rate cut. But to be fair, it had lowered rates at the three previous reviews.

In China, we should note that Shanghai's recent change in their house-buying restrictions has brought a spectacular surge in transactions - September home sales in this key city rose by more than +70% (they measure sales activity by m2).

We should also probably note that the aluminium price rose again overnight as it has done since early April and is now at its highest level since May 2022 when it was in the pandemic bubble. Other than that, it is now at a record high.

The UST 10yr yield is now at 3.95% and down -1 bp from this time yesterday. The key 2-10 yield curve is still at +50 bps. Their 1-5 curve is now flat. And their 3 mth-10yr curve is still -6 bps inverted. The China 10 year bond rate is down -1 bp at 1.76%. The Australian 10 year bond yield starts today at 4.12%, unchanged from yesterday. 

Wall Street is lower today, down -0.8% on the S&P500. Overnight European markets were mixed between London's +0.9% and Frankfurt's -0.7% retreat. Yesterday, Tokyo ended its Wednesday session little-changed. Hong Kong fell back -0.9% after the prior day's big gain and Shanghai dipped just -0.1% and holding most of theirs. Singapore was up +0.3%. The ASX200 ended its Wednesday down -0.7%. 

The price of gold will start today sharply lower again at US$4048/oz, down -US$74 from yesterday, another -1.8% correction. Silver has fallen less.

American oil prices are +US$1 firmer at just over US$58.50/bbl, with the international Brent price now just over US$62.50/bbl.

The Australian dollar is at just on 64.9 USc, and little-changed from yesterday. Against the Japanese yen we are up +20 bps at ¥98.6. Against the euro we are also unchanged at 55.9 euro cents.

The bitcoin price starts today at US$108,105 and down a rather sharpish -4.8% from this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.5%.

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