Here's our summary of key economic events overnight that affect Australia, with news the US Senate has agreed the Trump budget, but only after the Vice President broke a deadlock with a casting vote. Financial markets are wondering about the wisdom in all this with equities hesitating, bond yields turning up, and the USD drifting lower. To be fair, none of these movements are large today. But the implications of massively higher US debt levels are as is the opening of the magic-money accounting they have adopted. It will be the bond market that makes the practical judgement.
First, last week the US Redbook index was +4.9% higher than year ago levels but still in the easing trend that started in early April.
The May level of US job openings rose unexpectedly to more than 7.7 mln largely on a surge for foodservice jobs. Analysts didn't see this coming but perhaps they should have given the sharp ICE immigration crackdowns underway. These roles at these volumes will be hard to fill.
The latest US factory PMI report from the ISM shows a sector still in contraction, being led by weak new order inflows. The internationally benchmarked S&P Global/Markit version reported an expansion and a moderate one at that. But both noted rising inflation pressures.
It appears that the expected rise in US June car sales didn't occur, dipping to its slowest pace of the year.
Apparently its a good time to be in the logistics sector in the US with inventory levels rising and supply chains being stressed. The Logistics Managers Index is running at an unusually high level.
The Dallas Fed regional services survey reported a continuing contraction, although not as steep in June as May.
And the RCM/TIPP Economic Optimism Index was expected to bounce back in July but in fact it resumed the decline in a trend that started in December 2024.
After falling to a recent low in April, Japanese consumer sentiment is on the rise again, back to where it was at the start of the year, but not yet back to 2024 levels. But at least it is rising.
Yesterday we noted that the official factory PMI for China "improved" but was still showing a contraction. Today, the alternative Caixin factory PMI came in a little better than that, rising from May's tiny contraction to June's small expansion. These shifts don't mean a lot, but at least they are going in an improved direction. The Caixin survey noted "Higher new order inflows supported a renewed rise in production. That said, the rate at which new orders expanded was only marginal amid subdued exports." Trump's trade war may have kneecapped Chinese growth but it hasn't knocked them over.
Overnight the ECB released the results of its May survey of consumer inflation expectations and they dipped to 2.8% when a small rise was expected. Consumers apparently thought inflation was running at 3.1% over the past 12 months. Separately the EU released its June CPI data and that shows it running at 2.0%, up from 1.9% in May.
In Australia, large parts of the east coast is hunkering down for a lashing of strong winds and heavy rain. And that will include Sydney.
The UST 10yr yield is now at 4.25%, and up +2 bps from yesterday at this time. The key 2-10 yield curve is less positive at +48 bps. Their 1-5 curve is now inverted by -15 bps. And their 3 mth-10yr curve has flattened completely so now no inversion again. The Australian 10 year bond yield starts today at 4.12% and down -4 bps from yesterday. The China 10 year bond rate is little-changed at 1.65%.
Wall Street is marking time today with the S&P500 essentially unchanged. Its at a record high but seems to be having second thoughts about whether the situation justifies such lofty values. Overnight European markets ended mixed with Frankfurt down -1.0% while London rose +0.3%. Tokyo fell -1.2%. Hong Kong fell -0.9%, but Shanghai was up +0.4% in Tuesday trade. Singapore rose +0.6%. The ASX200 ended its Tuesday trade basically unchanged.
The price of gold will start today at US$3,337/oz, and up +US$45 from yesterday.
American oil prices are marginally firmer from yesterday, up +50 USc at just on US$65.50/bbl while the international Brent price is up the same at just over US$67/bbl.
The Aussie dollar is now just under 65.8 USc, up +20 bps from yesterday. Against the Japanese yen we are up +0 bps at ¥94.4. Against the euro we are up +30 bps to 56 euro cents.
The bitcoin price starts today at US$106,292 and down -1.3% from this time yesterday. Volatility over the past 24 hours has stayed low at just over +/-0.9%.