Markets in relief rally as US apparently retreats in Middle East; US mortgage applications dive; China resumes ship trade to Middle East; German mood sours; UST 10yr at 4.34%; gold rises; oil falls; AU$1 = 69.6 USc;

Here's our summary of key economic events overnight that affect Australia with news there is a general relief rally underway as the US indicates it is pulling back from its aggressive tactics with Iran. Trump seems to be 'declaring victory', but the Iranians seem to have given up nothing he sought. The Iranians are letting non-combatant ships pass through the Straits of Hormuz on their terms and schedule. They are also continuing active attacks on their foes.

Even if "it is over", the echo of sharply higher inflation will linger. Yes, oil prices have pulled back but they remain more than +50% higher than at the start of Trump's crazy adventure. Benchmark interest rates are higher too. Wall Street is down a net -5% even after today's rally. 1500 civilians were killed in Iran in these attacks, 18,500 injured. The US seems to have revealed it is relatively impotent to impose its will, even with apparent overwhelming force. Certainly when applied incompetently.

Meanwhile, US mortgage applications fell sharply for a second week, due to mortgage interest rates rising to a five month high. Refinance activity was hit particularly hard, but even if that wasn't the case, there was a notable retreat for new purchases too. That is two consecutive weeks of -10% reductions and that is the sharpest two-week retreat since December 2024.

US crude stocks rose again last week and their fifth consecutive weekly rise, the longest stretch since early 2024. Meanwhile petrol inventories fell for a sixth consecutive week. This allowed pressure on US pump prices to rise +34% in a month. So they have an odd combination of plenty of crude oil stocks, and sharply rising energy inflation. Grifting at its best.

In an item we don't usually report on, a jury in New Mexico has found both Meta and YouTube liable in a first-of-its-kind lawsuit that aimed to hold social media platforms responsible for addiction harm to children using their services, awarding US$3 mln in damages.

Yesterday we noted the sharp rise in yields at the US Treasury two year Note auction. Today there was a similar one for the five year equivalent. And it too brought a dramatically higher yield - 3.92% up from 3.56% at the prior equivalent event a month ago. Demand was less for this one too, but not as dramatically as for the two year.

In China, we should note that after a 21 day suspension, state owned shipping line COSCO is taking bookings for China to Middle East destinations again.

In Germany, their widely-watched Ifo Business Climate Index dropped in March to its weakest reading since February 2025, as the Middle East conflict dampened economic sentiment.

Here in Australia, February CPI inflation was reported as 3.7%, a marginal dip from 3.8% in January. Most sub-categories dipped, except the housing category which rose at the rate of 7.2% pa.

The UST 10yr yield is now just on 4.34%, down -7 bps from yesterday at this time. The key 2-10 yield curve is flatter at +45 bps (-3 bps). Their 1-5 curve is also flatter at +19 bps (-4 bps) and the 3 mth-10yr curve is now at +63 bps (-7 bps). The China 10 year bond rate is little-changed at 1.83%. The Japanese 10 year bond yield is down -2 bps at 2.25%. The Australian 10 year bond yield starts today at 4.92%, down -11 bps from yesterday. 

Wall Street rose on the S&P500 with up +0.5% in steady trade. Overnight, European equity markets were higher between London's +1.4% dip and Paris's +1.1%. Yesterday Tokyo rose +2.9%. Hong Kong was up +1.1%, and Shanghai rose +1.3%. Singapore was up +0.9%. The ASX200 gained a +1.8%. 

The price of gold will start today up +US$132 from yesterday at US$4556/oz. Silver is up +US$3 at US$72.50/oz.

American oil prices are down -US$2.50 at just over US$90/bbl, while the international Brent price is down -US$3 at just on US$101/bbl.

The Australian dollar is down -40 bps against the USD from yesterday, now at 69.6 USc. Against the Japanese yen we are down -10 bps at ¥110.9. Against the euro we are little-changed at 60.2 euro cents.

The bitcoin price starts today at US$71,453 and up +2.7% from this time yesterday. Volatility over the past 24 hours has been moderate at just under +/- 2.3%.