US inflation data outdated, shutdown impacts spread; Taiwan exports less than expected; China inflation rises; German factory orders fall; G7 decisions awaited; UST 10yr at 4.12%; gold dips and oil rises; AU$1 = 70.6 USc

Here's our summary of key economic events overnight that affect Australia with news markets are unsure about whether public efforts to calm the financial consequences of the war on Iran will work. Just at the moment, it's a wait-and-see situation.

But first in the US, the latest inflation expectations survey for February is out, revealing very little change. In the absence of subsequent events this stability might have seemed 'positive', but it is now only of historical note.

More currently, across the US, there are sharp rises in petrol prices. Those were responding to US$90/bbl crude prices. They are now up from there.

Meanwhile, we should probably note that there is a partial US shutdown underway. Among other impacts, security screening staff at airports are in layoff, not being paid. That is making travel in and through the US particularly messy.

Across the Pacific, Taiwanese exports fell in February to 'only' US$50 bln in the month, and up only +20.6% from the same month a year ago. But much of this can be explained by how the Chinese New Year holiday occurred this year.

China's CPI inflation rate jumped +1.0% in February from January to be up +1.3% from February a year ago. That takes them to a three year high. These were much sharper rises than expected and rises were expected. If both the US and China are now in a sharp-rising inflation period (and this data preceded the Iran crisis), then there is little chance Australia will be avoiding this pressure. Their beef prices are up +9.6% from a year ago, lamb prices up +6.6%. (Dairy prices there are down -1.1% on the same basis however.)

Now of course, an oil shock is likely to juice their inflation with a new burst.

Meanwhile China's producer price pressure eased in February, down just -0.9% from a year ago after their third [small] consecutive rise in month-on-month. Oil prices here will have an even larger impact.

Japan’s leading economic index, which gauges the outlook for the months ahead using indicators such as job offers and consumer sentiment, rose in January to its highest level since July 2022, confirming their improving economic outlook.

And here's something we don't normally look at. Business is picking up in Japan, enough that there is a notable rise in overtime pay there, the most since 2022.

In Europe, German factory orders slumped -11.1% in January from December, far worse than market expectations for a -4.3% drop. And December was downwardly revised as well. It was the first decline since August, largely driven by a -39% plunge in fabricated metal products after large orders in the prior month created a high base. Demand also weakened for machinery and equipment. However from a year ago, German factory orders were up +3.7% in January. (All this German data is inflation-adjusted.)

Locally, CommBank has reported two mortgage brokers and a string of accountants to police as it works to unravel a gigantic loan fraud using fake documents and international funds that could extend to AU$1 bln, the AFR is reporting.

On the commodities front, the big overnight mover is sulfur, a key fertiliser ingredient, up another 6%, and which has now doubled from a year ago.

The UST 10yr yield is now just on 4.12%, down -1 bp from yesterday. The key 2-10 yield curve is flatter at +54 bps (-4 bps). Their 1-5 curve is flatter at just on +15 bps (-2 bps) and the 3 mth-10yr curve is now at just on +41 bps (-2 bps). The China 10 year bond rate is up +1 bp at just on 1.81%. The Japanese 10 year bond yield is up +3 bps at 2.19%. The Australian 10 year bond yield starts today at 4.88%, up +3 bps from yesterday. 

On Wall Street, there is less panic and stoic resolve with the S&P500 opening its week down just -0.6% so far. Overnight European markets were down between London's -0.3% and Paris's -1.0%. Yesterday Tokyo ended down -5.2%. Hong Kong was down -1.4% and Shanghai was down -0.7%. Singapore fell hard (for them), down -1.9%. But the ASX200 fell even harder, down -2.8%.

The price of gold will start today down -US$69 from yesterday at US$5103/oz. Silver is little-changed however at US$84.50/oz today.

American oil prices are up +US$3, at just under US$94/bbl, while the international Brent price is up +US$6 to be now just on US$99/bbl. In between they have been very volatile, at one point reaching US$116/bbl. Relative calm came after G7 ministers started discussing releasing some strategic oil reserves. But there is no agreement or action on that yet, only 'possibilities'.

The Australian dollar is up +100 bps against the USD from yesterday, now just on 70.6 USc. Against the Japanese yen we are up +110 bps to ¥111.5. Against the euro we are up +40 bps at 60.9 euro cents.

The bitcoin price starts today at US$69,073 and up +3.3% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.7%.