US Fed holds as expected; US trade deficit much worse; Canada hikes; UK doubles bank tax; Australia inflation rises more than expected; UST 10yr at 5.04%; gold and oil ease; AU$1 = 70.4 USc

Here's our summary of key economic events overnight that affect Australia, with news it now looks like we are going to get an international rush of interest rate hikes before the end of the year - in Australia, in New Zealand, in Japan, in the UK, in the US and in Canada - after the pre-election pauses which likely raised the pressure because inflation's rises didn't pause.

As widely expected, the US Fed kept its 4% policy rate unchanged at at today's meeting on a vote of 10-2. (The two dissenters wanted a rise to weigh against inflation.) Recall they have a rising inflation rate, currently running at 3.7%. But markets now expect a December hike once their elections are out of the way.

Immediately after the Fed decision, the US Treasury yields rose, the S&P500 eased, and the USD rose. But all changes were marginal at best.

Meanwhile there was a small bounce-back in US mortgage applications last week after the prior week's sharp decline. That came as benchmark home loan interest rates eased slightly too.

The US goods trade balance got worse in September to -US$135 bln (up from -US$82.7 bln in September 2025), not only from August, but also worse than analysts had expected and a record deficit apart from in the January-March 2025 rush to beat Trump tariffs due in April 2025. Exports were up +12.5% from a year ago, imports up +27.8% on the same basis.

US inventories are rising too, both wholesale (up +7.4% in a year) and retail (up +4.9%). Part of this will no doubt be because of the surge in imports.

The US recorded another fall in crude oil inventories last week, down -1.9 mln bbls, more than the no-change expected. But there strategic reserves remained little-changed at very low levels.

The Bank of Canada raised its policy rate by +25 bps overnight to 2.5%. And there are calls for another rate hike to keep inflation at bay, currently running there at 3.1%

In Malaysia, they reported that September producer prices were +12% higher than a year ago, a faster rise than was expected

India's industrial production in September eased back to a +6.7% expansion, a lower gain than anticipated.

In Britain they have a special tax on banks, which has become a bit of a political football. A Conservative government brought it in in 2016 at 8%, then falling to 3% in 2023. But overnight they doubled it to 6% to start in 2027.

Here in Australia, CPI inflation came in at 4.3% in September, up from 4.0% in August, and higher than the 4.2% markets were expecting. At least it isn't as high as the 4.6% in March, but it is the second highest monthly level. The RBA next reviews their 4.6% cash rate target next week on November 3 and financial markets currently price in a 65% chance of another +25 bps rise, lower than you might have expected but on the basis the they might want to wait to see if their earlier hikes have an effect. The AUD rose on the news, our benchmark bond yields rose, and the ASX200 dipped by giving up some earlier gains.

The UST 10yr yield is up +5 bps from yesterday at 5.04%. The 30 year yield is at 5.32%, up +1 bp from yesterday. The key 2-10 yield curve is now at +25 bps (-1 bp). Their 1-5 curve is now at +37 bps (unchanged) and the 3 mth-10yr curve is at +102 bps (+4 bps). The China 10 year bond rate is back up +4 bps at under 1.62% and off its record low. The Japanese 10 year bond yield is up +2 bps at 2.83%. The Australian 10 year bond yield starts today at 5.21%, up +4 bps. 

Wall Street is marginally softer today with the S&P500 barely changed and the Nasdaq is down -0.2%. Overnight, European markets were mixed between no-change in Paris and Frankfurt's +0.4%. Yesterday Tokyo closed up +1.1%. Hong Kong rose +0.2% while Shanghai was up +0.9%. Singapore ended unchanged. The ASX200 ended its Wednesday session little-changed.

The price of gold is down -US$25 at US$4035/oz. Silver is just over US$53.50/oz and down -US$1 from yesterday.

Oil prices have risen back +US$3.50 from yesterday to just over US$103.50/bbl in the US, while the international Brent price is up +US$2.50 at just over US$116/bbl. Hormuz transits have slumped today ahead of expected new hostilities with just five ships exiting over the past 24 hours, no tankers escorted (1 dark with transponders off) and 7 entering for new loads, no tankers (1 dark). The Red Sea activity features a similar pullback in outbound traffic at the Yemen chokepoint.

The Australian dollar is up +10 bps from yesterday at just on 70.4 USc. Against the Japanese yen we are up +40 bps at ¥111.4. Against the euro we are up +10 bps at 63.2 euro cents.

The bitcoin price starts today at US$80,386 and down a very minor -0.2% from yesterday at this time. Volatility over the past 24 hours has remained low at +/-0.8%.