US inflation stable but big countervailing changes; eye on tariff backdown; China bank lending undershoots; India bank lending surges; Australia eyes protection tariffs; UST 10yr at 4.06%; gold up and oil holds; AU$1 = 70.8 USc

Here's our summary of key economic events overnight that affect Australia with news the week has ended with some data that accentuates some weaknesses in the world's two largest economies.

US CPI inflation came in at 2.4% for the year to January, slightly below the expected 2.5%. Core inflation came in at the expected 2.5%. This result was all due to lower petrol prices and falling used car prices. However, food was up +2.9%, and rents were up +3.0%. Electricity prices were up +6.3% (thank you, AI) and home gas was up +9.8%. It will be hard for households to feel inflation is under control.

And key will be how the US Fed will interpret this data when setting their policy rates at their next meeting on March 19, 20206 (NZT). Markets currently expect a hold, and at least until the middle of the year.

And household inflation pain is thought to be behind an expected White House backdown on tariffs on steel and aluminium, which some say will be rolled back in the coming month or so.

China reported that that price deflation in their housing market picked up in January for a third straight month at a faster pace, overall down -3.1% from a year ago. In January, the year-on-year sales price of existing homes in first-tier cities fell by -7.6%. Specifically, prices in Beijing, Shanghai, Guangzhou, and Shenzhen falling by -8.7%, -6.8%, -8.3%, and 6.5% respectively. In second- and third-tier cities, the year-on-year sales prices of existing homes fell by -6.2% and -6.1%. Prices for new-built houses fell too, but only by -2.1%.

In China, and as expected, the normal January surge in new yuan lending by banks occurred again this year, but by less than expected and by a -8.2% lower level than for 2025, -4.3% lower than for January 2024. And it was -5.8% lower than what was expected. It is a soft result and is typically followed by a sharply lower level of lending in February during the Spring Festival/CNY period. 2026 is off to a languid start for them.

Meanwhile, China's export economy is still functioning at full speed. Their current account surplus widened to an unprecedented US$242 bln in Q4-2025, sharply higher than the US$164 bln recorded a year earlier.

India also released bank loan data overnight, and their firms are borrowing up big. In fact, it was up +14.6% in January from a year ago, the strongest surge in a year.

In Russia, and despite January inflation jumping to 6.0%, their central bank cut its policy rate by -50 bps to 15.5%. This move was not expected.

In Australia, Canberra has released a review of carbon leakage, which recommends that new tariffs be applied to commodities like cement, and later steel, iron, glass, and aluminium, to prevent traders arbitraging to suppliers who ignore climate commitments.

The UST 10yr yield is now just over 4.06%, and down -5 bps from yesterday in an extended shift to 'safety'. A week ago it was at 4.21%, so that means a net -15 bps retreat. The key 2-10 yield curve is flatter at +64 bps (-2 bps). Their 1-5 curve is much flatter at just over +18 bps (-5 bps) and the 3 mth-10yr curve is also flatter at +37 bps (down -6 bps). The China 10 year bond rate is up +1 bp at just on 1.79%. The Japanese 10 year bond yield is little-changed at 2.23%. The Australian 10 year bond yield starts today at 4.71%, down -4 bps, down -15 bps for the week.

Wall Street has started its Friday with the S&P500 up +0.5% in a partial comeback. That means it is heading for a weekly loss of -0.8%. Overnight, European markets were mixed between London's +0.4% rise and Paris's -0.3% dip. Yesterday Tokyo ended is trade Friday down -1.2%, capping ite week after a +6.6% surge. Hong Kong was down -1.7% on Friday for a weekly -1.5% net loss. Shanghai closed down -1.3% to end its week down -0.5%. Singapore also closed down -1.6%. The ASX200 ended its Friday down -1.4% but managed to book a +1.2% weekly gain.

The Fear and Greed Index is now in the 'fear' zone, the same as last week's position.

The price of gold will start today up +US$52 from yesterday at US$5020/oz. A week ago its was US$4968/oz. Silver is up +US$2 at US$78/oz today.

American oil prices are little-changed at just over US$63/bbl, while the international Brent price is now just under US$68/bbl. A week ago it was US$64 and US$68.50 respectively.

The Australian  dollar is down -10 bps against the USD from yesterday, now just under 70.8 USc. Against the Japanese yenwe are also down -10 bps at 108.2 AUc. Against the euro we are down -10 bps at 58.6 euro cents.

The bitcoin price starts today at US$69,117 and up +4.3% from this time yesterday. It was at US$69,937 this time last week so we are down -1.2% from then. Volatility over the past 24 hours has been moderate at just on +/- 2.9%.