Here's our summary of key economic events overnight that affect Australia, with news the financial markets are awaiting the reconciliation of the US budget bill between the Senate and House versions. And they are waiting for news of "the countries lining up to make a [tariff] deal". There only seems to be one, Vietnam, and the details of that 'deal' remain murky.
Meanwhile, American home loan interest rates fell last week to a three month low and that brought a surge in refinancing, although applications for a new mortgage were basically unchanged at a low level. That resulted in the total volume of mortgage applications rising by +2.7% last week from the prior week.
Monitored job cuts in June shows it a relatively quiet month with 47,000 layoffs recorded. So far in 2025, the retail sector has cut the most private-sector jobs this year with 80,000 lost, hit by tariffs, inflation, and uncertainty. The expected DOGE cuts aren't as prominent yet due to the ongoing legal action uncertainty.
But in contract, the US ADP Employment Report recorded a shrinkage in private payrolls in June by -33,000 when a +95,000 gain was expected. That's a big miss. This is a precursor for tomorrow's non-farm payrolls report for June which is expected to show a low +110,000 jobs gain. And while the ADP Report has a spotty track record matching the official data, you would have to suspect there are downside risks to the non-farm payroll estimates.
Whatever the actual data shows, it seems pretty clear the stuffing is being knocked out of the once-strong engine of the US economy. 2025 is shaping up to be their weakest jobs growth since at least 2015 (pandemic excepted).
US vehicle sales are also easing, down to a 15.3 mln annual rate and well below the March rate of 17.8 mln. The pre-tariff surge has created a shadow. But few analysts think it will rise much, mainly because of the tariff taxes.
We don't have the equivalent China vehicle sales data yet but it will be very much higher (32.7 mln in the year to May), However they have their own problems of very rapid innovation and obsolescence, and worrying viability of large parts of their industry. Xiaomi's sudden entry into this sector is causing an existential shock for its rivals.
Singapore’s manufacturing PMI inched up out of contraction in June from May, snapping a two-month retreat as firms likely front-loaded orders ahead of looming American tariff deadlines. The recovery was primarily driven by faster expansion in new orders, new exports, and input purchases.
In Australia, retail sales rose marginally in May to be +3.3% higher than year-ago levels. For context, Australian CPI was up +2.4% in the year to March, up +2.1% in their monthly inflation indicator for the year to May. So we have been getting 'real' volume increases although that may have faded recently. And this recent fade may bolster the case for a July 8 RBA rate cut.
Meanwhile Australian building consents stopped falling in May as they had done in April, and are now +6.5% higher than May 2024. Multi-unit buildings are back driving the increase. The RBA's May 21 rate cut is getting the credit.
The UST 10yr yield is now at 4.29%, and up +4 bps from yesterday at this time. The key 2-10 yield curve is more positive at +51 bps. Their 1-5 curve is now inverted by -13 bps. And their 3 mth-10yr curve is now +5 bps positive. The Australian 10 year bond yield starts today at 4.21% and up +9 bps from yesterday. The China 10 year bond rate is little-changed at 1.64%. The NZ Government 10 year bond rate starts today at 4.50%, up +1 bp.
Wall Street is slightly firmer today with the S&P500 up +0.4%. But it is still at a record high. Overnight European markets ended mixed with London down -0.1% while Paris rose +1.0%. Tokyo fell -0.6%. Hong Kong rose +0.6%, but Shanghai was down a minor -0.1% in Wednesday trade. Singapore rose +0.5%. The ASX200 ended its Wednesday trade up +0.7%, while the NZX50 rose a lesser +0.4%.
The price of gold will start today at US$3,347/oz, and up +US$10 from yesterday.
American oil prices are much firmer from yesterday, up +US$1.50 at just over US$67/bbl while the international Brent price is up the same at just under US$69/bbl.
The Aussie dollar is now just on 65.8 USc, up +10 bps from yesterday. Against the Japanese yen we are also up +10 bps at ¥94.5. Against the RMB we are little-changed at ¥4.7. Against the euro we are up less than +10 bps at 55.8 euro cents.
The bitcoin price starts today at US$109,025 and up +2.6% from this time yesterday. Volatility over the past 24 hours has been modest at just over +/-1.9%.