US leading indicators turn down; Big Tech debt in focus; Canada inflation eases; China rates hold but cuts expected; some big countries have big currency issues; UST 10yr at 4.60%; gold dips; oil rises; AU$1 = 70 USc

Here's our summary of key economic events overnight that affect Australia, with news the Yemeni Houthis have announced a naval blockade against Saudi Arabia but effectively closing the Red Sea. Elsewhere new mediation efforts are underway again.

In the US, the Conference Board's leading indicator tracking turned negative in June. The shift down isn't a lot because it wasn't very positive in earlier months. But it is consistent with the Atlanta Fed's GDPNow tracking showing an exhaustion of the pace of the US expansion.

Off balance sheet debt at the big US tech giants is exploding, making investment assessments harder to make. It is now an estimated US$1.65 tln as artificial intelligence investments ballooned, a Nikkei study shows, and now exceeds actual reported debt. The problem is particularly acute at Meta. These companies are about to report Q2-2026 results and these debt levels are sure to become an issue. The main way these debt obligations stay off balance sheets is via "innovative" lease transactions centered around timing issues.

And US Big Tech valuations are also under threat from Chinese alternatives, especially the relatively new Moonshot K3 version. It is hard not to to get a sense that financial markets are facing a revaluation crisis in the tech sector.

In Canada, their CPI inflation rate came in at 2.8% in June, with a core rate of 2.1%. Both these measures were lower than in May and slightly lower than expected.

The Malaysian export boom is carrying on (+45% from June a year ago), especially for electronics (+57%) and petroleum (+56%), and especially to the US (+109%). But they needed all of that because imports surged sharply too, up 44% from a year ago.

The People’s Bank of China kept its key lending rates at record lows for a 14th straight month in July, as widely expected. The one-year loan prime rate (LPR), the benchmark for most corporate and household borrowing, was held at 3.0%, while the five-year LPR, a reference rate for mortgages, remained at 3.5%. However, rate cut expectations are rising there as their domestic economy slows.

German producer prices were up a modest +1.8% in June from a year ago, similar to the prior two months. But this new level is in contrast to the PPI deflation they had reported for the earlier twelve consecutive months.

A number of major countries are struggling to contain the devaluation of their currencies against the US dollar. Japan is seeing its currency at its weakest level since 1996. India is seeing levels back to near the record lows they had in mid-May. And Indonesia is battling record low levels as well. All these are major economies and all are trying to work what level of higher interest rate differential is needed to stabilise their situation. This is just part of a rising interest rate background, not helped by the prospect of higher US interest rates from their inability to tackle inflation effectively.

The UST 10yr yield is now just on 4.60%, up +4 bps from this time yesterday. The key 2-10 yield curve is now at +38 bps (up +1 bp). Their 1-5 curve is now at +29 bps (+2 bps) and the 3 mth-10yr curve is at +90 bps (+6 bps). The China 10 year bond rate is up +1 bps at 1.74%. The Japanese 10 year bond yield is now at 2.72%, up +1 bp.. The Australian 10 year bond yield starts today at 4.98%, up +8 bps from yesterday.

Wall Street has opened its week down -0.2% on the S&P500 with the Nasdaq down -0.1%. Overnight, European markets were mixed between Frankfurt's minor +0.1% rise and London's -0.7% retreat. Yesterday Tokyo ended down a sharp -4.0%. Hong Kong was up +2.4% and Shanghai was up +0.9%. Singapore ended down -0.2%. The ASX200 dipped a minor -0.1%. 

The price of gold has slipped to US$4003/oz, down -US$14 from yesterday. Silver is now just under US$56.50/oz, up +50 USc from yesterday.

Oil prices are +50 USc firmer from yesterday at just under US$83/bbl in the US, while the international Brent price is now just under US$89/bbl. Hormuz transits are still just a trickle There have been just 1 crude tanker and 5 cargo ships exiting over the past 24 hours (4 dark with transponders off) and 8 entering for new loads (8 dark) and all this traffic is Iran-linked.

The Australian dollar is +20 bps firmer from yesterday at just on 70 USc. Against the Japanese yen we are up +40 bps at ¥113.8. Against the euro we are also up +40 bps at just on 61. euro cents. 

The bitcoin price starts today at US$65,541 and up +1.6% from this time yesterday. Volatility over the past 24 hours has been modest at just over +/-1.4%.