More bellicose threats from the US as artificial deadline looms; dairy prices hold; US data weakens; China reserves hold; Aussie inflation jumps; UST 10yr at 4.34%; gold firm as oil holds high; AU$1 = 69.5 USc

Here's our summary of key economic events overnight that affect Australia with news most things are in abeyance until 10am (AEST) when the latest Trump genocidal threats on Iran come to a head. Financial markets are waiting to see how this plays out. And of course the Strait of Hormuz is completely shut now. Commodity prices reflect that added pressure, fertiliser prices especially.

But first today, the US Logistics Managers Index has shot up in March to its highest since May 2022 in the pandemic. This is entirely due to a very sharp rise in freight costs, but a contraction in transportation capacity happened at the same time. Warehousing capacity contracted as well. PPI inflation is getting well embedded now.

Meanwhile, the weekly ADP employment Pulse report delivered an unexpected +26,000 jobs gain last week, the most since this new tracking started.

However, this was not supported by the latest (February) durable goods order report that fell much more than expected, down -1.4% from January and its third consecutive decline. That makes it just +0.8% higher than year-ago levels and well below the PPI inflation rate.

And it was also not supported by the April update of the RCM/TIPP sentiment survey of 'economic optimism' which fell to its lowest level since June 2024.

Meanwhile, US consumer inflation expectations jumped from 3.0% in February to 3.4% in March. This may not have been as high as you may have expected, but the survey period covered the whole month, so is likely restrained by early-month responses.

China said its FX reserves fell -US$85 bln in March from February to US$3.34 tln, mainly due to changes in the USD:CNY exchange rate rather than an actual fall in reserves. It is a pullback from the all-time record high in February, back to levels that have generally prevailed since September 2025. Within this, their gold holding rose for a 17th consecutive month.

Here in Australia, their Melbourne Institute Monthly Inflation Gauge recorded a significant jump in monthly inflation for March, up +1.3% from February. This was primarily influenced by an increase in transport, attributable to surging fuel prices. In annual terms, headline inflation reached +4.3% and has been at above the top-end of the 2–3% RBA target band for the past seven months. The monthly cost of living also increased in March, particularly for self-funded retirees.

The Australian service sector fell into contraction in March. It was a sharp fall from the February expansion. A drop in new orders and turbulent international conditions as a result of the war in the Middle East were the main reasons behind the fall in output. Making it hurt harder, inflationary pressures intensified.

The New York Fed's Global Supply Chain pressure index is rising, with the March result its highest since January 2023, although to be fair, so far the rises from May 2023 have all be quite gradual. Things could change quickly on that front, of course.

The UST 10yr yield is now just on 4.35%, up +1 bp from yesterday. The key 2-10 yield curve is marginally steeper at +50 bps. (+2 bps) Their 1-5 curve is also up +2 bps at +29 bps and the 3 mth-10yr curve is steeper at +70 bps (+6 bps). The China 10 year bond rate is unchanged at 1.82%. The Japanese 10 year bond yield is down -3 bps at 2.39%. The Australian 10 year bond yield starts today at 4.99%, down -5 bps.

Wall Street is in a increasingly sour mood today, down -0.7% on the S&P500. European markets closed overnight lower, between Paris's -0.7% and Frankfurt's -1.1%. Tokyo was unchanged at its Tuesday close. Hong Kong fell -0.7% while Shanghai rose +0.3%. Singapore dipped -0.3%. The ASX closed its Tuesday trade up +1.7%.

The price of gold will start today back up +US$24 at US$4676/oz. Silver is down -US$1 at US$72/oz.

American oil prices are up +US$1 at just on US$115/bbl, while the international Brent price is down -50 USc at just under US$110/bbl.

The Australian dollar is up +50 bps from yesterday at this time at 69.5 USc. Against the Japanese yen we are up +70 bps at ¥111.1. Against the euro we are up +20 bps at just on 60.1 euro cents.

The bitcoin price starts today at US$68,728 and down -1.3% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.7%.