US data mixed but leading index retreats again; Canada lowers reliance on the US; Japanese machinery orders surge; China travel surges; Australia jobs market healthy; UST 10yr at 4.08%; gold stable, oil up again; AU$1 = 70.6 USc

Here's our summary of key economic events overnight that affect Australia with news the US leading index fell again but investors are still ignoring the risks of this unbalanced economy.

US initial jobless claims fell to 207,700 last week, slightly more than seasonal factors would have indicated. There are now 2.207 mln people on these benefits, slightly higher than year-ago levels and +5% higher than two years ago.

US exports fell in December from November, and for the third consecutive month. That was primarily because they exported less gold. All up, that took their monthly trade deficit back to the same levels as in 2024 and 2025 and consigning the August to November reductions as anomalies. For full 2025, exports rose +6.2% to US$3,4 tln with nonmonetary gold delivering the largest rise.

Meanwhile Philly Fed factory survey improved in February, and for a second straight month. That means six of the past twelve months recorded a gain. But the February 2026 level is still -15% lower than the February 2025 level. New order levels slipped in the latest month, but so did the elevated cost pressures.

US pending home sales (sales under contract) decreased -0.8% in January from the prior month and were down -0.4% from a year ago. They rose in the West, but were lower in the South in this latest report.

Meanwhile the Conference Board's leading indicator tracking fell again in December, and although by more than expected, not as much as in November. But they did revise the October decline lower.

The minutes of the last US Fed meeting on January 29 were released yesterday, revealing considerably varying viewpoints in this key group. The tension between the need to contain inflation and the desire to support the labour market are clear. Several participants indicated that further reductions in the fed funds rate would likely be appropriate if inflation continues to decline in line with their expectations. Others argued that it may be prudent to hold the policy rate steady for some time. And some even raised the possibility that rate increases could become necessary if inflation remains persistently above target. A majority judged that downside risks to employment had moderated in recent months while the risk of more persistent inflation remained elevated.

Meanwhile, strong demand from subprime customers spurred growth in American unsecured loans last year with their combined balances surging +10% to a new high of US$276 bln. Lower-income consumers are using these loans as a stopgap measure to deal with higher costs of living that have not been followed by similar raises in wages.

Canada's exports rose in December from November but were -6% lower than the same month a year ago. But their imports were unchanged, so their trade deficit eased. Their trade deficit with the US was lower. For all of 2025 their trade deficit widened to C$31 bln.

In Japan, the IMF urged them to keep raising interest rates and avoid loosening fiscal policy further, warning that trimming the consumption tax would erode its capacity to respond to future economic shocks.

Japanese machinery orders surged in December, up at a remarkable +19.1% rate in December (excluding volatile big-ticket items which showed even stronger gains). They are forecasting January-March orders to rise another +6.2%.

China said its second day of holiday travel was busier than the first, up almost +10% on the same period a year ago. This is the first time that the number of daily passenger trips during the 2026 Spring Festival travel rush has exceeded 300 million.

The Indonesian central bank kept its policy interest rate unchanged at 4.75% for the fifth consecutive time in its overnight meeting, in line with what markets were expecting.

In Europe, consumer sentiment improved in February in the Eurozone, continuing the improving trend that started in September.

In Australia, the January labour market data was released yesterday. Payrolls grew by +17,800. Within that, full-time employment rose by +50,500 people, offset by a fall of -32,700 part-time jobs. That takes their employed workforce to a record 14.7 mln. Better, they revised their December jobs gain up. The jobless rate stayed at 4.1%, a seven month low. A strong labour market, and rising inflation raises the chance of another RBA rate hike.

Global container freight rates were little-changed last week, down a minor -1% to be -31% lower than year-ago levels. Bulk cargo rates are up +8.5% for the past week to be +144% higher than year-ago levels.

The UST 10yr yield is still just under 4.08%, unchanged from this time yesterday. The key 2-10 yield curve is also unchanged at +62 bps. Their 1-5 curve is holding at just over +16 bps (-1 bp) and the 3 mth-10yr curve is just over +40 bps (up +1 bp). 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 4.74%, up another +4 bps today. 

Wall Street is lower with the S&P500 down -0.5% today. Overnight, European markets were all lower between Paris's -0.5% and Frankfurt's -1.0%. Yesterday Tokyo closed up +0.6%. Hong Kong was up +0.5, while Shanghai remained closed. Singapore rose an outsized +1.3%. The ASX200 ended its Thursday trade up +0.9%.

The price of gold will start today down a minor -US$5 from yesterday at US$5005/oz. Silver is down -50 USc at US$77.50/oz today.

American oil prices are up +US$2 at just under US$66.50/bbl, while the international Brent price is now just over US$71.50/bbl.

The Australian dollar is up +10 bps against the USD from yesterday, now just on 70.6 USc. Against the Japanese yen we are up +10 bps at ¥109.3. Against the euro we are up +20 bps at 60 euro cents.

The bitcoin price starts today at US$66,422 and down -1.1% from this time yesterday. Volatility over the past 24 hours has remained modest at just under +/- 1.2%.