US policy mess shows up in Beige Book; US homebuilders glum; Japanese machinery orders rise sharply; Albanese wins Brunei backing; UST 10yr at 4.28%; gold dips as oil rises; AU$1 = 71.7 USc

Here's our summary of key economic events overnight that affect Australia with news financial markets are betting Trump will endlessly extend the ceasefire with Iran and the crisis there will fade. Ships are getting through the Strait of Hormuz despite the US's 'blockade'. But there remains plenty of high-stakes risks, especially as Chinese navy warships are heading to the region. But Iran holds all the long-term cards.

In the US, Trump has renewed his threats to fire Fed boss Powell for 'corruption', a clear misdirection play that has few falling for it. If he did, it still remains uncertain how this would play out, or even whether he has the authority to do so.

US mortgage applications rose slightly last week with a return of better refinance activity. But activity for new home purchases slipped lower.

The US Fed's Beige Book survey found the conflict in the Middle East being cited as a major source of uncertainty that complicated decision-making around hiring, pricing, and capital investment, with many firms adopting a wait-and-see posture. It also found signs of consumer financial strain, increased price sensitivity, and rising demand at food banks and other social service organisations. But spending among higher-income consumers was resilient, they reported.

The April New York Empire factory survey revealed at sharp rise in costs and prices, but it expanded anyway and better than expected on a rise in new orders. But optimism waned and capital spending plans weakened.

Meanwhile home builders in the US are doing it tough with widespread discounting and incentive use to spur weak sales. The NAHB/Wells Fargo Housing Market Index fell to its lowest since September in March when a rise was anticipated in this sector.

There was a big surprise out of Japan yesterday. Machinery orders rose +13.6% in February from January, to be +24.7% higher than year-ago levels. This was after January orders were up +13.7%. The February year-on-year gain was three time higher than what was expected. (Japan has been drinking some Taiwan juice.) But a lot has happened since. Japanese manufacturers' confidence posted its biggest month-on-month drop in ​more than three years in April, dampened by surging oil prices and supply-chain disruptions caused ‌by the Middle East conflict, the Reuters Tankan poll showed.

Meanwhile, EU industrial production rose more in February from January than expected, and the decline from a year ago was less than expected. This data is inflation adjusted, but still, it isn't particularly positive.

Here in Australia, long term permanent immigrant arrivals bounced back strongly in February from January to +14,100 for the month but it was still -4.4% lower than for February 2025 and -14% lower than February 2024. For the year to February, permanent arrivals totaled +141,660, down more than -10% from a year ago and the least since September 2023.

And prime minister Albanese has been in Brunei where he secured substantial oil and fertiliser supply agreements.

The UST 10yr yield is now just on 4.28%, up +3 bps from this time yesterday. The key 2-10 yield curve is at +51 bps (+1 bp). Their 1-5 curve is at +20 bps (+2 bps) and the 3 mth-10yr curve is at +59 bps (+1 bp). The China 10 year bond rate is now at 1.78%, unchanged. The Japanese 10 year bond yield is down -1 bp at 2.41%. The Australian 10 year bond yield starts today at 4.97%, up +5 bps from yesterday. 

Wall Street is firmer with the S&P500 up +0.8% in Wednesday trade and rising on Trumps latest Iran TACO. European markets mixed between Frankfurt's +0.1% and Paris's -0.6%. Tokyo rose +0.4% in its Wednesday trade. Hong Kong was up +0.3%, and Shanghai was unchanged. Singapore was rose +0.3%. The ASX200 also rose +0.1%. 

The price of gold will start today down -US$44 at US$4493/oz. Silver is up +US$1.50 at US$79/oz.

American oil prices are up +US$1 at just under US$92.50/bbl, while the international Brent price is also up US$1, and now at US$95.50/bbl.

The Australian dollar is up +40 bps from yesterday at this time at 71.7 USc. Against the Japanese yen we are up +70 bps at ¥114. Against the euro we are up +20 bps at just on 60.7 euro cents.

The bitcoin price starts today at US$74,187 and down -0.7% from this time yesterday. Volatility over the past 24 hours has been low at just on +/- 0.9%.