US durable goods orders 'rise'; other US metrics unsupportive; Singapore factories hesitate; India & EU to sign major FTA; UST 10yr at 4.21%; precious metals zoom, with copper, tin; oil holds; NZ$1 = 59.7 USc

Here's our summary of key economic events overnight that affect Australia with news repricing for American risk is underway, evidenced by rising UST yields, a falling US dollar, and commodity price spikes.

First up today, American durable goods orders rose in November by more than expected to be +10.5% higher than year ago levels, a gain that has impressed markets, and came as a complete surprise. Non-defense capital goods orders, excluding aircraft, were up +4.3%, also a good gain.

But there are a number of factors we should take into account when assessing this data. It is 'nominal' and not inflation adjusted and tariff-taxes will be a part of the increase. Second, we looked back at the ISM and S&P Global factory PMIs for November and they did not pick up this type of gain. The ISM one actually reported contraction, the S&P Global and unchanged expansion. And then there is the 'new management' at the US data agency that releases this data. All three factors mean we should wait a bit to see if this is an outlier result. Risks abound.

Meanwhile, the Chicago Fed's National Activity Index came in below trend in November, although not as negative as it was in October. This is the ninth below-trend reading in the past twelve months.

It was a similar story for the Dallas Fed factory survey, which also recorded a pullback, for January, although not as steeply as it did in December. Output and new orders rose, but the overall index was held back by a sharp jump in prices paid for inputs. Only about half that was recovered by prices received even though that rose sharply too.

There was a US Treasury bond auction today and while it was well supported, it did bring a notable rise in the yield achieved. The 2 year bond delivered a yield of 3.55% at todays event, up from 3.45% at the prior equivalent event a month ago. This is the largest shift in yields we have observed at these events in more than a year. The US's ballooning deficit can't really afford rising interest rates, but then again it couldn't afford the tax cuts for the rich either.

Singapore's industrial production dipped rather sharply in December to end up +8.3% from the same month a year ago. But the December pullback was less than observers had expected.

In addition to Australia, Monday was also a public holiday in India, Republic Day. And the two top EU officials were in New Delhi to seal a key trade deal between the two economic powers. In fact, it has been called "the mother of all deals" and is set to be signed later today. Both sides are making major concessions to get it done and it is likely to boost trade in a globally significant way. The EU will get major access to India's car market. India will get the EU's preferential tariff MFN treatment.

The UST 10yr yield is now just on 4.21%, down -3 bps from this time yesterday. The key 2-10 yield curve is now at +62 bps (down -1 bp). Their 1-5 curve is now at +30 bps (down -1 bp) and the 3 mth-10yr curve is now at +52 bps (up +1 bp). The China 10 year bond rate is little-changed at 1.82%. The Japanese 10 year bond yield is down -2 bps at 2.24%. The Australian 10 year bond yield starts today at 4.81%, unchanged because it didn't trade yesterday. 

Wall Street has started its week positively with the S&P500 up +0.6%. Overnight, European markets were mixed between Paris's -0.1% dip and Frankfurt's +0.2% firming. Yesterday Tokyo ended its Monday session down -1.8%. Hong Kong was up +0.1% and Shanghai was down -0.1%. Singapore ended down -0.6%. The ASX200 was on holiday of course.

The price of gold will start today at US$5087/oz, up +US$104 from yesterday and a new record again. Silver is up proportionately more, up +US$12/oz at US$115/oz and also a record high. Platinum has risen to US$2857/oz, up +US$116/oz.

Tin prices are up +9.5% today, and copper is up +1.5%. Both build on recent surges to record highs. A falling greenback accentuates these rises, but all commodities are still priced in USD.

American oil prices are holding at yesterday's at just under US$61/bbl, while the international Brent price is softish, now just under US$65.50/bbl and down -50 USc.

The Australian dollar is up +10 bps from yesterday, now at 69.3 USc. Against the Japanese yen we are down -40 bps at ¥¥106.7. Against the euro we are also unchanged at just on 58.3 euro cents.

The bitcoin price starts today at US$87,677 and down just -0.3% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.4%.