China FDI weak, changes focus on iron ore, Japanese inflation eases; India busy; US leading index downbeat; Australia braces for CPI; UST 10yr at 4.24%; gold hovers near record high; oil holds; AU$1 = 68.9 USc

Here's our summary of key economic events over the weekend that affect Australia with news we need to keep an eye on the 'Sell America' trade, which until now has been more headlines that substance and mainly about China's divestment in US Treasuries. But the Greenland kerfuffle has triggered a serious rethink by many pension fund managers, and more are taking this action.

But first, the week ahead will feature Wednesday's local CPI data where it is expected to rise to 3.6%, the final indicator before next week's RBA rate review.

Globally, all eyes will be on the gold price and its expected push up through US$5000/oz which could come early in the week.

And in the US, all eyes will be on the Fed and its January 29 meeting, amid increasingly contrasting takes by voting members on the appropriate rate path. But most things related to public policy are in turmoil in the US, and the Fed's position is just part of that. We will be watching for bond market reactions.

Elsewhere, official interest rate decisions are expected in Canada, Brazil, and Sweden, and the Bank of Japan will publish meeting minutes.

An don't forget it is a holiday today in the north of the North Island (Auckland Anniversary Day), and in Australia (Australia Day),

In the first news up today, China released its December FDI data over the weekend 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.

China also release minimum wage rate data that showed 27 of the country’s 31 provincial jurisdictions have increased monthly minimum wages over the past year, with half introducing double-digit rises.

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.

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.

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. But markets are on alert for official intervention to support the yen.

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

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.

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 weekend update.

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.

Here in Australia last 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 Friday. We get our December CPI result later this week and it is widely expected to challenge the upper end of the 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 4.24%, down -2 bps from this time Saturday. The key 2-10 yield curve is now at +63 bps (down -2 bps). Their 1-5 curve is now at +31 bps (down -1 bp) and the 3 mth-10yr curve is now at +51 bps (also down -1 bp). The China 10 year bond rate is little-changed at 1.83%. The Japanese 10 year bond yield is also little-changed at 2.26%. The Australian 10 year bond yield starts today at 4.81%, down -3 bps from Saturday but up +10 bps from a week ago on the labour market signals. 

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 'sell America' trade, one started by Norway's sovereign wealth fund late last year.

The price of gold will start today at US$4983/oz, up a minor +US$1 from Saturday bit still a new record again. US$5000 could come quickly now. Silver is up +US$2/oz at US$103/oz and also a record high. Platinum ihas eased marginally to US$2741/oz.

American oil prices are holding at Saturday's at just on US$61/bbl, while the international Brent price is firmish, now just under US$66/bbl.

The Australian dollar is little-changed from Saturday, still at about 68.9 USc. That makes it almost a -2c loss for the greenback for the week. Against the Japanese yen we are down -20 bps at ¥107.69. Against the euro we are down -10 bps at just on 58.3 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 Saturday's fixing, the first time it has done that since May 2023. Although to be fair, most currencies are rising against the USD, ours included.

The bitcoin price starts today at US$87,968 and down -2.0% from this time Saturday. Volatility over the past 24 hours has been modest at just under +/- 1.0%.