US activity tame, leading index drifts lower; Canada retail up; Taiwan factories busier; China FDI weak; Japanese inflation eases; India busy; Simandou emerges; UST 10yr at 4.26%; precious metals rising; oil firms; AU$1 = 68.9 USc

Here's our summary of key economic events overnight that affect Australia with news that as the world adjusts to the isolation track the US is choosing, most other countries are finding ways to expand their economies and live with the geopolitical pressures.

First up today, we are starting to get the early January PMI reports for many key economies. The US factory version was little-changed in a modest expansion and it was the same for their services sector. But both recorded slightly better new order flows. Both noted cost pressures from their tariff-taxes. But as you will note from below this expansion lags most of the other large global economies.

The Conference Board's leading economic indicator tracking for the US isn't positive reading, with the latest update reporting further declines.

And in the US, there is a surge of new measles infections among young, unvaccinated children. In 2025, the US had 2,255 confirmed measles cases, a 34-year high and more than six times higher than in 2024. So far in 2026 it has reported 416 new cases in twelve more states, so they are on track to more than double it again in 2026. The explosion of cases in 2026 is about to become a major health story. Measles in the US isn't the only spreading health issue they have as a consequence of dodgy politics.

In Canada, their retail sector reported good gains in November, up +3.1% from a year ago, but these may not have extended into December, according to their overnight update.

Taiwan said industrial production surged more than +21% in December from the same month a year ago, the strongest growth since May. For all of 2025 it was up +16.7%, so the latest activity is an acceleration. But their local retail sector is not showing the same exuberance, up just +0.9% in December from a year ago but down -0.2% for all of 2025. Consumers there are prioritising saving over spending, just like in the country to their west.

China released its December FDI data overnight and it was negative again. For all of 2025 foreign direct investment fell -9.5%, following a sharp -24.7% fall in 2024 and that makes it the third consecutive year of contraction. December alone recorded a good pickup from November but even with that it was -7% lower than the December 2024 month. But at least it didn't shrink as it did in November from October.

In an interview with state media Xinhua, the Chinese central bank governor indicated that cuts to their interest rates and reserve ratio requirements are on the cards in 2026.

Japanese inflation eased to 2.1% in December from 2.9% in November, the lowest since March 2022. Food inflation fell to a 13-month low of +5.1%, driven by the slowest rise in rice prices in 16 months.

The Japanese January 'flash' PMIs were quite positive with private sector output expanding at their quickest rate for nearly a year-and-a-half to start 2026.

The Japanese central bank reviewed its monetary policy and no change was made, held at 0.75% - because an election is imminent. But now inflation concerns seem to be easing too.

In India, their 'flash' January PMIs rose across both sectors, maintaining the very high rates of economic expansion there.

In the EU, output continues to rise in January and business confidence strengthened. That raised their factory PMIs to expansion, but their services PMI's hesitated.

And here is something to keep an eye on, Europe's largest pension fund cut its holdings of US Treasury debt sharply in 2025, a trend that seems to be gathering steam, the 'divest America' trade.

Here in Australia this week, we posted stronger than expected labour market data. That has sharply changed financial market pricing. And in turn there has been a rush by banks, both a major (NAB) and some challengers, to hike their fixed home loan rates. We get our December CPI result next week and it is widely expected to challenge the upper end of their policy tolerance. If it does, suddenly Australian floating mortgage rates are at risk of a rise on February 3, 2026. 

Staying in Australia, private sector output expanded at its fastest pace in five months in December according to the S&P Global 'flash' PMI report. Both the factory and services sector expansions picked up, the services sector more than the factory sector however. Faster new order growth, including for exports, was a noted feature.

And we should probably note that China received its first shipment of iron ore from their giant African mine at Simandou, Guinea. This likely marks a shift in China's iron ore import focus, likely to Australia's detriment.

The UST 10yr yield is now just on 4.26%, up +1 bp from this time yesterday, up a net +3 bps for the week. The key 2-10 yield curve is now at +65 bps (unchanged). Their 1-5 curve is now at +32 bps (also unchanged) and the 3 mth-10yr curve is now at +56 bps (slightly flatter). The China 10 year bond rate is little-changed at 1.83%. The Japanese 10 year bond yield is little-changed at 2.27% although up +8 bps for the week. The Australian 10 year bond yield starts today at 4.84%, unchanged from yesterday but up +13 bps from a week ago on the labour market signals.

Wall Street is in its Friday session with the S&P500 down -0.1% and heading for a -0.8% fall for the week. Overnight European markets were mixed between London's -0.1% dip and Frankfurt's +0.2% surge. Yesterday Tokyo closed up +0.3% for a +0.9% weekly gain. Hong Kong was up +0.4% for the same weekly rise. Shanghai was up +0.3% for a +1.1% weekly gain. Singapore rose and impressive +1.3% yesterday. The ASX200 ended up +0.1% in Friday trade capping a down week, falling -0.3%.

The Fear and Greed Index is now back in the 'neutral' zone from last week's 'greed' zone.

The price of gold will start today at US$4982/oz, and up another +US$73 from yesterday and a new record again. US$5000 could come quickly now. It is a fast-moving situation so these prices are likely to be different when you read this. Silver is up even more sharply, up +US$5/oz at US$101/oz and also a record high. Platinum is the star today, now up to US$2763/oz. A week ago these precious metals prices were: Gold US$4581, so up +8.8%; Silver was at US$88.50 so a +14.1% weekly jump. Platinum was at US$2312, so a +19.5% surge for the week.

American oil prices are up +US$1.50 from yesterday at just under US$61/bbl, while the international Brent price is now just over US$65.50/bbl. A week ago these prices were US$60/bbl and US$63.50/bbl, so a net +US$1 gain.

The Kiwi dollar is firmer from yesterday, up another +50 bps to 68.9 USc as the USD is still being devalued in financial markets. That makes it almost a -2c loss for the greenback. Against the Japanese yen we are down -70 bps at ¥107.8. Against the euro we are up +20 bps at just on 58.4 euro cents. 

And we should probably note that the official Chinese yuan setting by the Peoples Bank of China slipped below 7 to the US dollar in yesterday's fixing, the first time it has done that since May 2023.

The bitcoin price starts today at US$89,785 and up +0.8% from this time yesterday. A week ago it was at US$94,581 so a -5.1% net drop over that period. Volatility over the past 24 hours has been modest at just under +/- 1.3%.