Here's our summary of key economic events overnight that affect Australia, with news equity markets and cryptos hit records as investors go all-in on greed, ignoring the bond market warning signals.
With a US breaking point becoming clearer, it is hard to know why rich investors willfully ignore the consequences of the Trump cult. They may be the first to be hurt and have the most to lose.
First in the US, the level of tariff-taxes being imposed on Americans is becoming clearer. The latest US Government accounts show them hitting US$27 bln in June, US$113 bln for the nine months to June. Tariffs are paid by the importer and become a cost that will be embedded into how those products are sold. Treasury officials anticipate further growth in tariffs collected, expecting them to reach US$300 bln in the 2025 calendar year.
Those added taxes allowed the US Federal Government to report a +US$27 bln surplus in June. In June 2024 they reported a -US$71 bln deficit. In the twelve months to June, they have accumulated a -US$1.9 tln deficit, more than the -US$1.8 tln in the 2024 fiscal year.
The tariff boost for June got the benefit of some seasonal shifts, Treasury officials noted. Adjusting for those, June would have shown a -US$70 bln deficit instead of the +US$27 bln surplus actually reported, they said.
Overall US Federal government spending dropped -7.0% in June to US$499 bln. But that was after increased outlays on healthcare, Social Security, defense, and interest on debt. Gross interest in June was $84 bln in the month (US$749 bln for fiscal 2025), the second largest spending line item. (In the ten months to July, interest costs will break through $1 tln for the fiscal year so far. Its probably a benchmark being breached as you read this. And it may reach US$1.4 tln in the current fiscal year to September.) If the bond market keeps adding risk premiums to US Treasury debt it could well grow to challenge the US$141 bln monthly social security cost and matching of breaching the the annual cost of social security. It doesn't seem far fetched, given that the new Trump budget locks in huge tax cuts for the rich.
The USDA WASDE July report released overnight reported that American grain farmers are facing low prices and a supply glut, made worse by the tariff policies (although the report itself didn't say that). It did note that US cattle prices are soft, but beef imports are rising. And it noted that US milk production is rising again. Cheese prices were lowered but they did see SMP exports rising from the US. Their forecast for 2026 is for higher dairy prices.
Across the border and in something of a surprise, the Canadian labour market strengthened in June. Not only did they generate +83,000 new jobs in the month when no gains were expected, their jobless rate dipped when it was expected to rise. Even though +70,000 of those new jobs were part-time, the +13,000 new full-time jobs was much better than the -1,000 full-time job losses expected. Even wages rose +3.2% from a year ago, although they did slip slightly from May and have remained flat since January. Given the forces being applied by their bully neighbour, it is hard to know whether this overall June result is just an anomaly or an indication of resilience. Only time will tell.
Canada also released May building consent data overnight and it was also unusually strong, up at a +12% pa rate from April. From a year ago the June consent values were up +5.1% on an inflation-adjusted basis. By any standard this is very good too.
The UST 10yr yield is now at 4.42%, and up +7 bps from yesterday, up +10 bps for the week. The key 2-10 yield curve is steeper at +52 bps. Their 1-5 curve is now inverted by only -1 bp. And their 3 mth-10yr curve now +10 bps positive. The Australian 10 year bond yield starts today at 4.36% and up +4 bps from yesterday, up +17 bps for the week. The China 10 year bond rate is unchanged today at 1.66%, up +2 bps for the week.
Wall Street is slightly softer on the S&P500 and down -0.3% but still near record territory for the weekly close, unchanged for the week. Overnight European markets all fell back by about -0.8%. However all advanced a net +1.5% on average for the week. Tokyo ended its Friday session down -0.2% and down -0.4% for the week. Hong Kong was up +0.5% on Friday for a weekly +1.3% gain. Shanghai was unchanged on Friday, but up +1.2% for the week. Singapore rose +0.3%. The ASX200 ended its Friday session down -0.1% for a weekly -0.3% retreat.
The Fear & Greed index is still in the 'extreme greed' zone as it was a week ago as investors like the large benefits from the Trump Budget.
The price of gold will start today at US$3,354/oz, and up +US$37 from yesterday, and that is up a net +US$18/oz from a week ago.
American oil prices are back up +US$2 at US$68.50/bbl while the international Brent price is now just under US$70.50/bbl. A week ago these prices were -US$2 lower.
The Australian dollar is now at 65.1 USc, down -20 bps from yesterday. Against the Japanese yen we are down -20 bps at ¥95.2. Against the euro we are unchanged at 55.4 euro cents.
The bitcoin price starts today at US$117,478, a new record high and up +3.7% from this time yesterday. It is up +9.0% from a week ago. Volatility over the past 24 hours has been moderate at just on +/-2.4%.
Bloomberg has an in-depth investigation of the murky links between Binance, Trump, and CZ's reach for a pardon.