Financial markets in broad but shallow retreat, led by commodities; Canadian inflation lower; Malaysian exports strong; Australian consumers more bullish; UST 10yr at 4.30%; gold and oil weaken; AU$1 = 64.6 USc

​Here's our summary of key economic events overnight that affect Australia, with news commodity prices are taking a hit in global markets today as overall economic prospects are under scrutiny in both the US and China. And Wall Street is following them down, in their case led by tech firms.

Prices for both hard and soft commodities are in retreat today, including oil, natural gas, steel, copper, aluminium, wheat, and soybeans. Even bitcoin is falling, down -8.5% over the past week when it hit a recent high note. But not everything.

In the US, housing starts rose a bit more than expected. But the gain was accentuated because July 2024 was unusually weak and that was because for some reason the 2024 bump came in August. Still it was encouraging because analysts had expected a small retreat in July. Still, the general level remains well below the general levels over the prior years. And new building permits were unusually low in July and are now running at their lowest level since June 2020. So the future isn't that bright in this sector.

In the rural sector, American farmers are particularly worried about how the Trump Administration is upending their industry, and questions about survivability are arising. Many apparently face bankruptcy.

Canadian CPI inflation fell, and by a bit more than expected. It came in at 1.9% in June in a small blip up. It was expected to slip back to a 1.8% rate but in fact came in at 1.7%, the same level it was in April and May. Fuel prices led the decline, but rents rose +3.0% and grocery prices were up +3.4% This will make it tricky for their central bank when they next meet on September 17.

Across the Pacific, the top leaders in China have been on vacation and are now starting to return to active front-line duty.

Meanwhile, Malaysian exports turned out to be much stronger in July than anticipated. They rose +6.8% in July from the same month a year ago, defying market expectations of a -5% drop. They also revised their June result to be a smaller dip than first reported. Malaysia imports were expected to fall sharply, but in fact held their own.

Here in Australia, the Westpac-Melbourne Institute Consumer Sentiment Index surged 5.7% in August to its highest since February 2022, after a small rise in July. All components rose: family finances compared to a year ago rose +6.2%, while expectations for the next 12 months climbed +5.4%. Views on the economy improved, with the 12-month outlook up +7.6% and the 5-year outlook rose +5.4%, both above historical norms. The time to buy a major household item index gained +4.2%, while unemployment expectations fell -2.4%, still below the long-run level of 129. Their long spell of consumer pessimism may be ending, though sustaining momentum could require more easing. This survey underscores why the second-term Albanese government is riding ever higher in their polls, and the right-wing opposition parties are in disarray.

The UST 10yr yield is now at 4.30%, down -4 bps from yesterday at this time. The key 2-10 yield curve is now at +55 bps. Their 1-5 curve is still inverted by -10 bps. And their 3 mth-10yr curve is still inverted by -4 bps. The Australian 10 year bond yield starts today at 4.32% and up +2 bps bps from yesterday. The China 10 year bond rate is unchanged at 1.77%.

Wall Street has eased today with the S&P500 down -0.6% in Tuesday trade. Overnight, European markets were firm between London's +0.3% and Paris's +1.2%. Tokyo ended its Tuesday session down -0.4% and off its record high. Hong Kong was down -0.2% while Shanghai was unchanged. Singapore recovered +0.7% however. The ASX200 fell -0.7% in Tuesday trade.

The price of gold will start today at US$3,316/oz, down -US$17 from yesterday.

American oil prices have fallen -US$1 to be just under US$62.50/bbl with the international Brent price over US$65.50/bbl.

The Australian dollar is at just on 64.6 USc and down -30 bps from yesterday. Against the Japanese yen we have fallen -60 bps to ¥95.2 AUc. Against the euro we are down -30 bps at 55.4 euro cents.

The bitcoin price starts today at US$113,512 and down -2.6% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/-1.5%.