US data generally positive; Japan ready for rate rise, machine tool orders strong; Taiwan exports stars again; German exports rise; UST 10yr at 4.17%; gold holds, silver at new record; oil falls on glut fears; AU$1 = 66.5 USc

Here's our summary of key economic events overnight that affect Australia, with news the world is awash in better economic news today in many of the world's largest economies.

First in the US there were some key labour market reports out today. First the weekly ADP private payrolls update for last week recorded a small +5000 gain which follows five consecutive weeks where they recorded more than a -27,000 loss of jobs (which was consistent with what they reported for the November month).

And the catchup JOLTS report for October showed little-change from September, but job openings were a little higher than anticipated for both months.

And the widely watched SME sentiment survey from the NFIB was marginally better than expected, up slightly from October, but just back to the levels it has been at since May although that still leaves it at a slight net negative. Interestingly, the retail Redbook survey eased back a bit last week to the average rise it has recorded since later 2023, which mirrors retail inflation that is juiced by tariff-taxes. It is perhaps an indicator that the Thanksgiving seasonal retail was not as strong as hoped.

There is more evidence that Trump is just plain dumb. After his failure to get the Chinese to buy US soybeans at scale, he is rolling out US$16 mln in taxpayer support for some farmers which will actually be very little for most. Now he is threatening swingeing tariffs on Canadian fertilizer imports of potash, oblivious that even if that blocks cheap Canadian imports, it will leave high-priced local product, with a net loss for farmers, probably exceeding US$15 bln. Even a high school economics student can see the flaws in his approach, which embeds higher costs on Americans.

Trump has also handed China a huge AI chip win, agreeing to let Nvidia sell its best stuff to China. This will allow China to close the gap on the US AI advantages much faster now. The US security community is gobsmacked. China may not buy a lot, but it does give them access to the technology.

In Japan, machine tool orders were strong in November, up +14.2% from a year ago continuing expanded growth over the past seven months. But domestic demand actually fell. It was foreign orders that were the star here, up by +23%.

Next week, there will be an important central bank meeting in Tokyo. Overnight remarks by the Bank of Japan governor seemed to set the groundworks for another rate rise on the basis that inflation is embedding, especially wage inflation, and that the risks of deflation there are receding on a permanent basis. Japanese long term interest rates are now approaching 2% and a twenty year high.

Taiwanese exports were exceptionally strong again, as we have come to expect. They surged +56% in November from a year ago to a record US$64 bln, up from a 49% gain in October and again better that market expectations for a 41% rise. It is strong global demand for their chips and AI technology that is powering these amazing results.

German exports also rose in October, a surprise because that had risen strongly in September and a small correction was expected.

We get US export data on Friday, and in contrast to Japan, Germany, Taiwan and China, they are currently expected to show a retreat.

Here in Australia, the RBA kept the cash rate on hold at Tuesday's review as expected. Their review was slightly more hawkish, firmly focused on the upside risks to inflation. And that is what financial markets reacted to with bond yields rising as a result.

And staying here in Australia, the NAB Business Confidence Index slipped in November from October, but stayed just positive, although the weakest reading since April. The survey showed business conditions softened after declines in sales and profitability.

The UST 10yr yield is now at 4.17%, unchanged from this time yesterday. The key 2-10 yield curve is still at +57 bps. Their 1-5 curve is now positive by +14 bps and the 3 mth-10yr curve is still positive by +45 bps. The China 10 year bond rate is unchanged at 1.86%. The Japanese 10 year bond yield is down -2 bps to 1.96%. The Australian 10 year bond yield starts today at 4.78%, up +5 bps after the RBA MPS.

Wall Street has started its Tuesday with the S&P500 up +0.1% and not making back yesterday's dip. Overnight, European markets were mixed between Paris's -0.7% drop and Frankfurt's +0.5% rise. Yesterday, Tokyo ended its Tuesday trade up +0.1%. Hong Kong was down another sharpish -1.3% and Shanghai ended down -0.4%. Singapore edged up +0.1%. The ASX200 ended its Tuesday with a -0.4% retreat. 

The price of gold will start today at US$4217/oz, and up +US$26 from yesterday. And we should note that silver has set a new record high, over US$60/oz.

American oil prices are down -US$1 again at just over US$58/bbl, while the international Brent price is just under US$62/bbl. Analysts are sow saying a 'super glut' of oil is on the way, and downward price pressures will rise from here.

The Australian dollar is +30 bps firmer from yesterday, now at just on 66.5 USc. Against the Japanese yen though we are up a sharp +100 bps at ¥104.3. Against the euro we are up +30 bps at just under 57.2 euro cents. 

The bitcoin price starts today at US$94,444 and up +5.1% from this time yesterday. Volatility over the past 24 hours has been moderate, at just over +/- 2.4%.