US core inflation – without food and energy – was up +2.5% and this is probably the Fed’s get-out-of-jail card. US PCE July inflation data is next due August 27.<\/p>\n
US mortgage applications<\/a> recovered notably last week, up +3.6% from the prior week after four of the prior six weeks were decreases. The rise was driven by refinance activity, borrowers who could not wait any longer and taking advantage of a very minor dip in mortgage rates to 6.77% (which will seem high to our readers).<\/p>\n Last week, the US reported a huge surge in crude oil stocks<\/a>, the larges weekly rise in more than three years. It wasn’t expected – in fact another retreat was expected. It is not clear why, because it wasn’t driven by imports, according to this data. Strategic reserves will next be reported at month-end.<\/p>\n The August USDA WASDE report<\/a> has raised its estimates for beef imports in 2026 and 2027, and lowered its expected milk prices marginally.<\/p>\n The US Treasury reported<\/a> a much larger budget deficit for July than expected, and the expected July deficit was outsized to start with. They ended up with almost a -US$\u00bd tln deficit in the month alone. The public mismanagement is now epic. For their fiscal year to September, they will be reporting a deficit of at least -US$2 tln (-US$1.95 tln over the past 12 months), easily a new record. Trump’s swamp creatures are helping themselves.<\/p>\n Meanwhile, a well-supported UST 10yr auction<\/a> delivered a yield of 4.63% today (high ofg 4.68%), compared to 4.53% at the prior equivalent event<\/a> a month ago.<\/p>\n Canadian building consents<\/a> jumped notably in June, up +18% from the same month a year ago driven by non-residential construction. Residential construction rose too, just not as sharply as the commercial sector.<\/p>\n In Japan, the Reuters Tankan index<\/a> for manufacturers rose in August to its highest reading since March. Leading the mood improvement was solid semiconductor demand. But the chemicals sector also rose along with the metal and machinery sectors. Non-manufacturers’ sentiment also rose, buoyed by strong domestic consumption. This survey likely points to a similar rise in the official Tankan survey that will come later in August.<\/p>\n Japanese machine tool orders<\/a> continued their very strong growth in July, up +50% from a year ago and while the value wasn’t a record, it was very close. These orders have taken off since March 2026. Demand was huge from both domestic and export customers.<\/p>\n China’s vehicle sales<\/a> slipped below 2.5 mln in July and recorded a year on year dip of -0.3%. But it is the September to December period when their domestic vehicle sales usually peak.<\/p>\n The UST 10yr yield<\/a> is now just on 4.67%, dipping -2 bps from this time yesterday. The 30 year yield is at 5.25% and holding. The key 2-10 yield curve is now at +48 bps (up +2 bps). Their 1-5 curve is now at +37 bps (+1 bp) and the 3 mth-10yr curve is at +99 bps (unchanged). The China 10 year bond rate is little-changed at 1.70%. The Japanese 10 year bond yield is now at 2.84%, up +4 bps. The Australian 10 year bond yield starts today at 4.98%, down -1 bp. The NZ Government 10 year bond rate is at 4.73%, and up +2 bps from yesterday at this time.<\/p>\n Wall Street has recovered somewhat with the S&P500 up +0.3% and the Nasdaq up +0.6%. Overnight, European markets were all lower between London’s -0.1% drop and Paris’s -0.5%. Yesterday Tokyo was up +0.8%. Hong Kong was down -0.8% but Shanghai rose +0.3%. Singapore fell back -0.6%. The ASX200 ended down -0.4%. And the NZX50 fell -0.9% in its Wednesday trade in a sell-off that gathered pace after the special National Party caucus meeting.<\/p>\n The price of gold<\/a> is rising at US$4417\/oz, up +US$51 from yesterday. Silver has risen +US$1 to just over US$65.50\/oz.<\/p>\n Oil prices are down -50 USc from yesterday at just under US$83\/bbl in the US, while the international Brent price is now just over US$88.50\/bbl. Hormuz transits<\/a> are still very low. There have been two crude tankers and only 3 cargo ships exiting over the past 24 hours (3 dark with transponders off) and eleven entering for new loads (3 dark), again all Iran-linked. Oddly, Trump is claiming the US is in control of Hormuz and it is safe to transit. The data shows no-one believes him. The Red Sea activity is less than 20 either way at the Yemen chokepoint.<\/p>\n The Kiwi dollar is down -25 bps from yesterday at just under 58.6 USc. Against the Aussie we are down -40 bps at 82.9 AUc. Against the euro we have retreated -20 bps to 50.8 euro cents. That all means our TWI-5 starts today at just on 62.2 which is down -30 bps from this time yesterday.<\/p>\n The bitcoin price starts today at US$63,420 and down a -0.2% from this time yesterday. Volatility over the past 24 hours has also been low at just on +\/-0.9%.<\/p>\n Select chart tabs<\/p>\n US$
\n AU$
\n TWI-5
\n \u00a5en
\n \u00a5uan
\n \u20acuro
\n GBP
\n Bitcoin<\/p>\n
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