Key US indicators point lower, risk appetite fades; dairy prices drop; EU inflation stable; global electricity demand surges; UST 10yr at 4.28%; gold rises sharply to new ATH, oil firmish; AU$1 = 65.2 USc

​Here's our summary of key economic events overnight that affect Australia, with news that US financial markets are back from holiday and concluding that the tech sector is over-valued and that US public policy is heading into a blind alley. The bond market sentiment we noted in the past month has now spread into the equity markets.

And you can see the rising risk aversion in the gold price, driving it sharply higher today into new territory.

At the overnight dairy auction, prices slumped more than -4.3% in US dollar terms. Both the milk powders retreated sharply, with SMP down -5.8% and WMP down -5.3%. Most other milk fat commodities fell too with the notable exception of cheddar cheese which was up +3.6%.

In the US, the widely-watched ISM factory PMI was still contracting at a concerning rate in August. And that was despite a small rise in new orders. Both measures were lower than expected. The alternate S&P Global/Markit PMI told a different story however, rising on more production and inventory building. But it was the ISM one that markets took more notice of.

US logistics LMI was little-changed. But the elements like inventory levels and inventory costs are rising at an increasing rate, and these are not good portends.

And the RCM/TIPP consumer sentiment index was quite downbeat as well. In fact it fell when a rise was anticipated.

In Canada, their factory PMI rose from the deepish contraction it has been in for most of 2025, but it is still not expanding. It too was based on rising production, but no rise in new orders.

In Europe, they said their August inflation was running at 2.1%, up marginally from +2.0% in July. Interestingly, energy costs are still retreating but the impact on the overall price level is now much less with food and services prices rising at a much lesser rate now.

A new global report is highlighting that electricity demand is on course to rise by +3.3% in 2025 and +3.7% in 2026, more than twice as fast as total energy demand growth over the same period. According to the report, renewables are expected to overtake coal as the world’s largest source of electricity generation as early as 2025 or by 2026 at the latest, depending on weather and fuel price trends. At the same time, nuclear power output is expected to reach record highs. The steady increase in natural gas-fired power generation is set to continue displacing coal and oil in the power sector in many regions.

The UST 10yr yield is now at 4.28%, up +3 bps from yesterday at this time. The key 2-10 yield curve is up at +63 bps. The last time it was this steep was in February 2022. Long dated yields are on the move higher. The UST 30 year yield is actually closing in on 2007 levels and almost at 5%. Their 1-5 curve is now inverted by -10 bps. And their 3 mth-10yr curve is now inverted -3 bps. The China 10 year bond rate is down -1 bp at 1.77%. The Australian 10 year bond yield starts today at 4.38% and up another +4 bps from yesterday. The NZ Government 10 year bond rate starts today at just over 4.46%, up +5 bps.

Wall Street is back from holiday and grumpy with the S&P500 down -1.0%. Overnight, European markets were all lower with Frankfurt down -2.3% and Paris down -0.7%. Yesterday, Tokyo closed up +0.3%, Hong Kong closed down -0.5% and Shanghai closed down -0.4%. Singapore ended its session up +0.5%. The ASX200 ended its Tuesday session down -0.3%. The NZX however was up a good +0.5% in the circumstances.

The price of gold will start today at US$3,526/oz, up +US$50 from yesterday and surging to a new record high. Silver has moved higher too but not as aggressively.

American oil prices are +US$1 firmer at just over US$65.50/bbl with the international Brent price holding just over US$69/bbl.

The Australian dollar is at just under 65.2 USc and down -30 bps from yesterday and its lowest level since mid-April. Against the Japanese yen we are up +20 bps to ¥96.8. Against the euro we are up +10 bps at 56 euro cents.

The bitcoin price starts today at US$110,892 and up +1.8% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.8%.