US second tier data positive; call to punish economists for tariff research; Japanese manufacturers bullish; Australian leading index eases, wages fall in real terms; UST 10yr at 4.08%; gold and oil up; AU$1 = 70.7 USc

Here's our summary of key economic events overnight that affect Ausyralia with news real wages are falling locally.

But first, after falling almost -20% over the past three weeks, US mortgage applications rose +2.8% last week on stronger refinance activity. Demand for mortgages to buy a new home actually fell last week.

We also got US housing starts data overnight, but for December. They rose +6.2% from November to an annualised rate of 1.4 mln, up from 1.322 mln in the previous month and well above the expected 1.33 mln. This latest data is the highest level since July and up from October’s 15-month low. Single-family housing starts rose +4.1% while multi-family starts climbed +10.1% to a three-month high.

New orders for US-made durable goods fell by -1.4% in December from November, following an upwardly revised +5.4% jump in November. The drop was milder than the -2% decline expected by analysts and was largely driven by a -5.3% fall in aircraft-related orders. Orders also declined sharply for capital goods, also largely aircraft-related. This leaves capital goods orders up +21% from a year ago, however, and overall orders up +12% on the same year-ago basis.

More currently, January US factory production rose +0.6% to be +2.4% higher than year-ago levels.

Interestingly, tariffs haven't been enough to stop the US losing another aluminium smelter, leaving the country with just five primary metal production plants.

And in other tariff news, Kevin Hassett, a top Trump economic adviser lashed out at a study from the New York Fed that found that American companies shoulder most of the costs of tariffs. He called for the central bank to punish the four researchers behind the work.

In Japan, manufacturer sentiment rose to extend the current positive run to 11 months. The Reuters Tankan index rose to +13 in February from +7 in January, driven by sharply better machinery orders - and a weaker yen.

In Australia, the Westpac–Melbourne Institute Leading Index six-month annualised growth rate, which indicates the likely pace of economic activity, stalled in January from December's positive outlook. This means they no longer have above-trend growth; it is back to their normal level.

And yesterday, the latest data out of Australia on wage growth pegs it at 3.4% in 2025. While that may seem a healthy rise, their CPI inflation rose 3.8% in the same year. Real wages are going backwards, it seems.

The UST 10yr yield is still just under 4.08%, up +3 bps from this time yesterday. The key 2-10 yield curve is unchanged at +62 bps. Their 1-5 curve is holding at just over +15 bps (-1 bp) and the 3 mth-10yr curve is just under +39 bps (up +3 bps). The China 10 year bond rate is unchanged at just on 1.81%. The Japanese 10 year bond yield is holding at 2.14%. The Australian 10 year bond yield starts today at 4.73%, up +4 bps today. 

Wall Street is firmer with the S&P500 up +0.9% today on a rebounding tech sector. Overnight, European markets were up +1.2% except Paris which rose +0.8%. Yesterday Tokyo closed up +1.0%. Hong Kong, Shanghai and Singapore were all on holiday for CNY. The ASX200 ended its Wednesday trade up +0.5%.

The price of gold will start today back up +US$149 from yesterday at US$5007/oz. Silver is up +US$5.50 at US$78/oz today.

American oil prices are up +US$2.50 at just over US$64.50/bbl, while the international Brent price is now at US$69.50/bbl.

The Australian dollar is down -10 bps against the USD from yesterday, now just on 70.7 USc. Against the Japanese yen we are up +70 bps at ¥109.2. Against the euro we are up +10 bps at 59.8 euro cents.

The bitcoin price starts today at US$67,150 and down -0.6% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.2%.