Global factory PMIs very positive; US tariff policy in court again; China on holiday; Binance skirts EU regulation; Aussie house prices keep falling; UST 10yr at 5.24%; gold holds and oil rises; AU$1 = 69.1 USc

Here's our summary of key economic events overnight that affect Australia, with news global factories are mostly in expansion mode, driven by a new order surge and despite the rising cost pressures.

But first, monitored US job cuts stayed quite low in September at about 44,000, similar to August, and similar to the level in September a year ago.

US initial jobless claims dipped last week to 157,000, a shift that is explained by seasonal factors. There are now 1.5 mln people on these benefits, a substantial fall, as qualification restrictions keep many from extending this support.

The September ISM factory PMI was little-changed from its good August level. Price pressures persist but new orders are staying at good levels. The alternate S&P Global factory PMI showed a better result and to its best levels since the pandemic. The same new order drivers were picked up here too, and the cost pressures as well.

Little in these two reports will restrain the Fed from targeting inflation and with less worry about hurting jobs. But the tame PCE inflation report yesterday is shifting the tone among overnight Fed speakers away from an October rate hike. The Treasury market eased on the comments.

In New York, the US Court of International Trade has held hearings on whether Trump's revised tariff policies are legal. This three judge panel struck down his first approach. The next decision is expected before Christmas although it could be earlier if no new or novel arguments are presented.

In Canada, their factory PMI is still expanding but at a slower pace and now at a six month low. Output rose despite a decline in new orders affected by tariffs challenges. Cost inflation has surged to its highest since July 2022. Confidence in their outlook dropped as firms grapple with supply-side disruptions.

Across the Pacific, China is on its Golden Week holiday which will last until October 7.

Very strong new order growth has powered the September Taiwan factory PMI to a fast expansion. Apart from the pandemic recover, this puts their expansion back on par with the very good 2018 level. This is the sort of expansion you might see in an emerging economy (say like India) but unusual for a developed economy - and far faster than in its jealous, giant neighbour to its west.

South Korean exports came in very much higher than expected in August. Recall they it US$100 bln in June for the first time and have grown since then, hitting a new all-time record of US$121 bln in August which is up +83% from the same month a year ago. Of course, electronics are the key driver.

The S&P Global PMI for India reported a pickup in new orders too.

The EU factory PMI gathered pace in September from their fastest pace in new orders since March 2022.

And staying in Europe, Binance is thumbing its nose at regulators who have ordered it to wind down its operations there. It has no license to operate but is using an obscure legal exemption to stay active.

Meanwhile, August exports from Australia rose +15.3% from a year ago while imports rose +16.3% on the same basis. That means their merchandise trade surplus fell to just +$495 mln in August, its lowest August in ten years. the average August surplus over that period has been ten times that level (ie $5.2 bln).

Staying here in Australia, Cotality’s Home Value Index fell -1.1% in September, the sixth straight month of falling values.‍ Brisbane had the sharpest monthly drop. Across the state capitals, almost every suburb (97%) has recorded value declines over the past three months, as a broad-based negative housing cycle sets in.

Global container freight rates were little-changed again this past week, and are now +166% higher than year-ago levels. The sharp rises in May and June have been sustained and are showing no signs of normalising. There were falls in the China to EU trade again, offset by rises in the China to US trade. Bulk cargo rates fell -9% and off their recent peak, to now be +44% higher than year-ago levels.

The UST 10yr yield is now just on 5.24%, down -6 bps from yesterday. The 30 year yield is at 5.58%, down -7 bps. The key 2-10 yield curve is now at +46 bps (up +5 bps). Their 1-5 curve is now at +56 bps (+2 bp) and the 3 mth-10yr curve is at +136 bps (-1 bp). The China 10 year bond rate is little-changed at 1.68%. The Japanese 10 year bond yield is now at 3.09%, up 2 bps from yesterday. The Australian 10 year bond yield starts today at 5.37%, unchanged from yesterday. 

Wall Street is marking time today, with the S&P500 up +0.2% in its Thursday. The Nasdaq is up +0.1%  European markets ended their Thursday trade sharply lower between London's -1.7% fall and Frankfurt's -1.0% retreat. Tokyo ended yesterday up a very strong +3.3%. Hong Kong and Shanghai were both closed for a national holiday. Singapore ended down -0.1%. The ASX200 ended down a sharp -2.0% on gloom extending from the global bond rout and the realisation that the key trading partners are facing a stunted outlook.

The price of gold is at US$4166/oz and up +US$12 from yesterday. Silver is at just over US$60.50/oz and up +50 USc.

Oil prices have risen +US$1/bbl from yesterday to just over US$92/bbl in the US, while the international Brent price is up US$3 to US$98.50/bbl. Hormuz transits have stayed bit higher today with ten ships exiting over the past 24 hours, 5 of which are tankers escorted (4 dark with transponders off) and 6 entering for new loads (2 dark). The Red Sea activity is a bit less than 20 vessels in either direction at the Yemen chokepoint.

The Australian dollar is down -40 bps from yesterday, now at just on 69.1 USc. Against the Japanese yen we are down -20 bps at ¥109.1. Against the euro we are up +30 bps at just on 61.6 euro cents.

The bitcoin price starts today at US$84,230 and essentially unchanged from yesterday. Volatility over the past 24 hours has been low at just under +/-0.8%.