Trump chickening out on Iran strategy; US data soft; EU sentiment dives; moderates start to win again in Europe; UST 10yr at 4.34%; gold down further; oil dips; AU$1 = 70.1 USc

Here's our summary of key economic events overnight that affect Australia with news Trump seems to be seeking a way out of his morass, and parts of the financial market is cheering the shift.

Planned strikes on Iranian electricity production and energy infrastructure have been halted "for five days", after Trump claimed "very good and productive" discussions with Tehran. He is maintaining the claim even as the Iranians scoffed at his claims. (Probably what is happening is that the Americans are talking to Pakistani officials, who claim to be in discussion with some Iranians.) TACO in action, and equity markets liked this shift. The oil price retreated sharply too. But the USD sank and the bond markets have maintained most of their risk premium in the face of this instability in American policy-making.

Meanwhile, the IEA boss, speaking in Australia, accused the Americans of not realising the damage to the global economy that they have already done.

And the Israelis are continuing their strikes against Iran, probably unhappy with the Trump backflip. They will likely keep things very unstable.

Meanwhile in the US, the Chicago Fed's National Activity Index decreased yet again, its ninth below-trend result in the past year. And since the start of March, nowcasting forecasts for US economic expansion have fallen away noticeably.

And that is reflected in updated construction data for January. It fell from December (-0.3%) when a rise was anticipated to be less than +1.0% higher than year-ago levels, far less than accounted for by inflation. The worrying part for them is that it is private construction that is weak, the only strength is in public construction. Residential construction is tailing off faster in this data.

In Singapore, they reported that inflation dipped to 1.2% in February. But they also reported that their core inflation rose to 1.4%, and while that isn't much different to their headline result, it is their highest level in late 2024.

In the EU, consumer sentiment has taken a dive in March, likely for the obvious reason. It is now back to October 2023 levels all of a sudden.

And staying in Europe, it is probably worth noting that the French far-right parties failed to make meaningful gains in weekend local elections. And in Italy, the right-wing government also failed at a referendum to change their constitution.

The UST 10yr yield is now just on 4.34%, down -5 bps from yesterday at this time. The key 2-10 yield curve is little-changed at +49 bps (-1 bp). Their 1-5 curve is also little-changed at +20 bps (+1 bp) and the 3 mth-10yr curve is now at +68 bps (-3 bps). The China 10 year bond rate is up +1 bp at 1.84%. The Japanese 10 year bond yield is up +4 bps at 2.30%. The Australian 10 year bond yield starts today at 5.05%, up +3 bps from yesterday. 

Wall Street opened its week with the S&P500 up +1.4%. Overnight, European equity markets were mixed between London's -0.2% dip and Frankfurt's +1.0% rise. Yesterday however, Tokyo fell -3.5%. That was matched by Hong Kong, and Shanghai fell -3.6%. Singapore was down -2.2%. The ASX200 was down -0.7%. 

The price of gold will start today down -US$104 from yesterday at US$4386/oz. Silver is actually up +US$1.50 at US$69/oz.

American oil prices are down -US$8.50 at just on US$89.50/bbl, while the international Brent price is down -US$11, now just on US$101/bbl.

The Australian dollar is firmer against the USD from yesterday, up +10 bps at 70.1 USc. Against the Japanese yen we are down -40 bps at ¥111.1. Against the euro we are marginally softer, down -10 bps at just on 60.4 euro cents. 

The bitcoin price starts today at US$70,555 and up +2.6% from this time yesterday. Volatility over the past 24 hours has been high at just over +/- 3.3%.