Trump drops case against Powell; Hormuz still shut, but ...; US sentiment dire; Canadian retail rises; China FDI stays very weak; Russia cuts policy rate; UST 10yr at 4.31%; gold up but oil eases; AU$1 = 71.5 USc

Here's our summary of key economic events overnight that affect Australia with news that the Trump Administration has dropped its criminal investigation into the Fed's Powell - which means the Kevin Warsh is likely to be the new Fed boss soon - and that the US is sending negotiators to Pakistan to talk to an Iranian delegation.

Both moves were seen by markets as 'positive' and equities rose.

But markets seem to be ignoring the detail that while the US delegation is 'senior', the Iranian one isn't with the key foreign minister likely to be absent - at this time, anyway.

The Strait of Hormuz is still essentially shut. Only five ships crossed in the past 24 hours, all with Iranian consent.

In the US, the University of Michigan’s Consumer Sentiment Index was revised up to 49.8 in April from an initial estimate. Despite the slight improvement, this remains the survey's lowest level ever for a survey that started in 1946. Which just emphasises the heavy toll the Iran conflict has taken on consumer confidence. It fell across all demographics, regardless of political affiliation, income, age, or education.

Expectations for business conditions deteriorated for both the short and long term, nearly matching levels seen a year ago when reciprocal tariffs were introduced. While the Iran ceasefire and a slight dip in petrol prices helped sentiment recover a fraction of its early-month losses, the conflict’s primary impact on consumers stems from the wide spreading price shocks. Inflation expectations surged, with year-ahead expectations jumping to 4.7% from 3.8%, the largest one-month increase since April 2025, while long-term expectations climbed to 3.5%, the highest since October 2025.

Meanwhile, US oil rigs in service fell yet again while local oil company bosses piling on the pressure to keep prices high in their domestic market. We make that the lowest level since May 2020, and prior to that, June 2016. American consumers are being taken for suckers.

Canadian retail sales were up +3.8% in February from a year ago, and actually up on a volume (price-adjusted) basis as well. They rose again in March but that was likely only because of higher fuel costs.

Interestingly, even though they face the same pressures from importing fuel, Japan seems to have avoided an inflation spike in March. It came in there at 1.5%, little different to their February rate (1.3%) or the expected rate (1.5%). These are still at near 4 year lows.

China said its March net inflow of foreign direct investment was a modest +US13.0 bln increase from February, almost double to the even more modest flow in March 2025. For the year to date it is running at about the same levels although that is a very low standard, back to about GFC levels.

And China is subtly restricting outflows. China’s securities regulator has taken action against a domestic company for listing on a foreign exchange (the Nasdaq) without getting their approval, the first enforcement action of this kind.

The Russian central bank cut its policy rate by -50 bps overnight to 14.5%. This was the expected action.

The UST 10yr yield is now just on 4.31%, down -2 bps from this time Friday but up +6 bps for the week. The key 2-10 yield curve is now at +53 bps (+4 bp). Their 1-5 curve is at +25 bps (-2 bps) and the 3 mth-10yr curve is at +64 bps (-6 bps). The China 10 year bond rate is now at 1.75%, up +1 bp. The Japanese 10 year bond yield is unchanged at 2.43%. The Australian 10 year bond yield starts today at 4.95%, down -4 bps from Friday, down -3 bps for the week. 

Wall Street has ended its Friday trade with the S&P500 up +0.8% for a weekly rise of +0.7%. Overnight, European markets were down -0.8% except Frankfurt which was only down -0.1% overnight. And yesterday Tokyo closed up +1.0% to cap a +1.5% weekly rise%, Hong Kong rose +0.2% on Friday to limit the weekly fall to -0.9%, and Shanghai eased -0.3% for a +0.7% weekly gain. Singapore ended -0.4% lower. The ASX200 closed unchanged on Friday to end the week down -1.7%.

The Fear & Greed index is still in the 'greed' zone, where it was last week.

The price of gold will start today up +US$36 at US$4718/oz, but down -US$139/oz for the week. Silver is up +50 USc at just on US$76.50/oz, down -US$5 for the week.

American oil prices are down -US$2.50 at just over US$94/bbl, while the international Brent price is down only -50 USc, and now at US$105/bbl. A week ago these prices were US$84.50/bbl and US$91/bbl respectively, so a big net rise.

The Australian dollar is up +20 bps from yesterday at this time at 71.5 USc. That is down -20 bps from this time last week. Against the Japanese yen we are up +10 bps at ¥114. Against the euro we are unchanged at 61 euro cents. 

The bitcoin price starts today at US$77,609 and essentially unchanged from this time yesterday. And it is up only +0.6% from this time last week. Volatility over the past 24 hours has been low at just under +/- 0.8%.