US factories falter as do Canadian factories; India industrial production stops expanding; China PMI retreat confirmed; UST 10yr at 4.09%; gold firm, silver surges again and oil soft; AU$1 = 65.5 USc

Here's our summary of key economic events overnight that affect Australia, with news the global economic expansion is tailing off as we come to the end of 2025.

First in the US, we can report that new orders in their factory sector are falling. That is a key factor that has driven the closely-watched ISM manufacturing PMI lower, for a ninth consecutive month, and falling at a faster pace. Survey respondents cite problems with the tariff-taxes, and "trade confusion". And they report high price pressure, and rising. The November result is below the deterioration expected. It's a result that has cast a pall over Wall Street today.

But the ISM report is only one perspective. The rival S&PGlobal factory PMI reported a November expansion, even a modest rise in new orders. But it also noted that a lot of this 'positive activity' is related to inventory building which won't be sustainable without final customer demand. Financial markets seemed to ignore this alternate PMI.

The Canadian factory PMi wasn't positive either for November which reported a marginal contraction. Interestingly, it also reported lower inflation pressures.

These two North American factory PMIs feed into a global report that has overall output and new orders rising at slower rates but business optimism rising to a five-month high.

In India, their October report for industrial production brought an unexpectedly sharp slowdown, hardly above year-ago levels when +4% year-on-year gains had become the norm for the past two years. We will need to wait for their November result to see if October was just an aberration. They will be hoping so.

In Japan, their central bank governor has been speaking and has hinted that a rate hike at their next meeting on December 19 is a live possibility. (see pages 6 & 7.)

In China, the alternative PMI to the official version has also slipped in a similar way. The S&PGlobal manufacturing sector PMI shows that conditions deteriorated in November, not by a lot, but certainly going the wrong way. There was no growth in new orders.

Here in Australia, the Melbourne Institute inflation gauge for November rose again and is now further above the RBA's 2-3% inflation target range. Interestingly, while this result is higher, it is lower than the official October CPI rate of 3.8%.

After a -2.6% quarter-on-quarter fall in Australian company profits in Q2-2025, they were expected to bounce back in Q3-2025. But in the event they stalled, unchanged, in a disappointing outcome and only +1.1% higher than year-ago levels.

And staying locally, the Cotality house price tracking rose +1.0% in November, a slight softening from the +1.1% gain in October. Annual growth lifted to +7.1%, with quarterly gains tracking a +13.2% annualised pace. Sydney and Melbourne are the laggards, indicating that affordability has reached its serviceability limits.

The UST 10yr yield is now just on 4.09%, up +7 bps from this time yesterday. The key 2-10 yield curve is now at +56 bps. Their 1-5 curve is now positive by +5 bps and the 3 mth-10yr curve is positive by +14 bps. The China 10 year bond rate is holding higher at 1.83%. The Australian 10 year bond yield starts today at 4.59%, up +6 bps. 

Wall Street has started its week hesitantly, with the S&P500 down -0.2%. Overnight, European markets opened lower by a similar amount, except Frankfurt which fell a full -1.0%. Yesterday, Tokyo closed down -1.9%, Hong Kong was up +0.7%, and that was matched by Shanghai. Singapore closed essentially unchanged. The ASX200 ended its Monday session down -0.6%. 

The price of gold will start today at US$4233/oz, and up +US$15 from yesterday. But silver has surged again to a new record high of US$58.50/oz, up +US$2 from yesterday.

American oil prices are -50 USc softer at just over US$59/bbl, while the international Brent price is unchanged at just on US$63/bbl. And we should probably also note that natural gas prices are rising and are now at their highest except for the pandemic period.

The Australian dollar is up +10 bps from yesterday, now at just over 65.5 USc. Against the Japanese yen we are down -20 bps at just on ¥101.7. Against the euro we have held at 56.4 euro cents.

The bitcoin price starts today at US$85,426 and down -7.0% from this time yesterday. Volatility over the past 24 hours has been very high, at just on +/- 4.3%.