US mortgage rates jump; US inflation expectations jump; US Fed members aligned in inflation fight; China's gold holding jump; India hikes; German factories busy; UST 10yr at 5.29%; gold soft, oil holds high; AU$1 = 69.6 USc

Here's our summary of key economic events overnight that affect Australia, with news risk appetites seem to have weakened overnight as the cost of money shows little sign its rising trajectory is ending.

First in the US, their benchmark 30 year mortgage rate has risen sharply again over the past week, now at 7.49% and its highest since the brief spike in late 2023. Prior to that, it is highest since December 2000. So it will be no surprise to know that mortgage application levels fell sharply again and led down by refinance activity.

Meanwhile, Americans expect inflation to rise faster and be 3.9% in one year's time. That is up from the expected 3.6% a month ago, and higher than the 3.7% rise expected by analysts. Adding pressure, households expect their earnings to rise just 2.6%.

US crude oil stocks took an outsized tumble last week, down much more than expected and down by much more than the prior two weeks of gains. There has been no update of their weekly Strategic Petroleum Reserve data since September 25, but it is very likely to have fallen again.

Rising however are bond yields. The latest US Treasury 10yr bond auction brought a very large jump from the prior event. It was well supported although the US Government had to pay 5.26% median yield (5.30% high) compared to 4.77% at the prior equivalent event a month ago. But the resilient support suggests investors are interested in yields at this level, and that vibe spilled over into secondary market trading and capped rises there.

The US Fed released the minutes of their September 17 meetings at that showed surprising unity of the need for the rate hike they delivered. Clearly they are worried about inflation, less so about risks to jobs.

Across the Pacific, China said its foreign exchange reserves fell slightly to US$3.4 tln in September, their lowest since March, all because of a strong US dollar and rising yields on their foreign bond holdings (which depress that face value of those bonds). Meanwhile their gold holdings rose almost +1% in one month, now at 77.47 mln ounces. That is up from 74.19 mln ounces at the start of the year, up from 73.95 mln oz a year ago or +4.8%. They are clearly picking up the pace of building these gold reserves.

And staying in China, car retailers are reported to be having to offer deep discounts to move vehicles, especially luxury vehicles.

Taiwanese inflation might be accelerating again. It was 2.1% in August and September's rate was expected to be similar. But it actually came in at 2.7%, far higher than anticipated. It was their highest rate in 20 months.

In India, and as widely expected, their central bank raised its policy rate by +25 bps to 5.5% overnight, partly to defend the weakening rupee. They indicated that further rises may be necessary.

In Germany, and after a string of declines, industrial production jumped there to be +2.3% higher in August that the same month a year earlier. That is their strongest gain since March 2023. A small gain was expected but the size of the increase wasn't.

In data supplied by the Institute of Public Affairs, the 2026 Fraser report of economic freedom ranks Australia at 8th in the world behind Hong Kong, Switzerland, Singapore, New Zealand then the US. The UK ranks #10, Japan #13.

The UST 10yr yield is rising, now just on 5.29%, up +3 bps from yesterday. The 30 year yield is at 5.66%, up +4 bps. The key 2-10 yield curve is now at +52 bps (up +4 bps). Their 1-5 curve is now at +61 bps (+3 bps) and the 3 mth-10yr curve is at +138 bps (+2 bps). The China 10 year bond rate is little-changed at 1.68%. The Japanese 10 year bond yield is now at 3.12%, up +2 bps from yesterday. The Australian 10 year bond yield starts today at 5.40%, up +5 bps from yesterday.

Wall Street is lower today with the S&P500 down -0.2% and the Nasdaq also down -0.2%. Overnight, European markets were lower too between London's -0.8% rise and Frankfurt's -1.4% drop. Yesterday, Tokyo ended down -0.9%. Hong King was down -0.6% and of course Shanghai was closed. Singapore ended down a sharpish -1.6%, rattled by new enforcement of Chinese trust fund rules. The ASX200 closed down a minor -0.1%. 

The price of gold is at US$4109/oz and down -US$48 from yesterday. Silver is at just under US$60/oz and down -US$1.50.

Oil prices have eased another -50 USc/bbl from yesterday to just over US$89/bbl in the US, while the international Brent price is up +50 USc to US$100.50/bbl. And we should note the attacks on tankers in the Hormuz region attempting to exit in the past few days are not letting up. Hormuz transits have reduced again today with just eight ships exiting over the past 24 hours, no tankers escorted (1 dark with transponders off) and 5 entering for new loads (0 dark). The Red Sea activity is back up to the low 20 vessels in either direction at the Yemen chokepoint.

The Australian dollar is down -20 bps from yesterday, now at just under 69.6 USc. Against the Japanese yen we are down -40 bps at 110¥. Against the euro we are up +20 bps at just on 62.2 euro cents.

The bitcoin price starts today at US$83,424 and down -2.6% from yesterday. Volatility over the past 24 hours has been modest at just over +/-1.7%.