Oil prices tumble even as Hormuz remains shut; US labour market expands; China holiday travel rises; global debt demand shifts away from US Treasuries; UST 10yr at 4.35%; gold jumps and oil falls; AU$1 = 72.3 USc

Here's our summary of key economic events overnight that affect Australia with news oil prices have tumbled as the US seems to give up on most of its stated objectives, including the promise of safe-passage for shipping, in a u-turn to extract itself from a losing hand. Crude oil prices are down more than -10% on the news, although it needs to be noted that the Strait of Hormuz remains closed. It is just market euphoria. We now need to start worrying about a permanent Iranian transit tax after the US walks away. The Gulf States who supported the US are about to be thrown under the bus. Financial markets don't care of course and like the end of the adventure.

US mortgage applications fell again last week as interest rates rise, both for refinance activity and new home purchases. This takes this activity back to September 2024 levels.

The US ADP employment report said their private labour market added +109,000 jobs in April, marginally more than the +99,000 expected. This sets the official non-farm payrolls report up for an expected +60,000 rise, with upside. Most of the new jobs are coming from aggressive hiring in their healthcare sector.

After the prior week's outsized fall, this week the EIA reports another notable fall in US crude oil stocks. In fact, every metric fell other than US crude oil imports. There is certainly no relief at US petrol pumps yet, with prices now up more than +50% from their pre-Trump Gulf War levels.

We have earlier noted the politicalisation of US official data, especially of the Bureau of Labor Statistics who produce CPI, PPI and labour market data. We weren't the only ones. A new analytical report has been looking at how this has affected the quality of their data and concluded there is a worrying impact from this trend. So we need to be sceptical, and the next of their big set piece reports is the April non-farm payrolls. This means we will need to rely more on other non-Trump Administration high frequency market data.

In Canada, their widely-watched Ivey PMI surged into a strong expansion in April and by more than expected.

In China, new analysis shows Chinese companies are reporting lackluster earnings, with overall net profit declining in 2025 for the third consecutive year as the property slump dragged on and more retailers posted losses, hurting employment and the economy as a whole.

Meanwhile, China's Golden Week holiday has just ended, and reports are that there was less air travel this year - but very much more high-speed rail travel. Overall domestic holiday activity was up +3.5% with air travel falling -5.7% year-on-year to 10.5 million passengers between May 1 and May 5, railway journeys up +4.6% to 1.06 billion.

And staying in China, their non-official S&P Global services PMI reports that their services sector expanded faster as new business picked up in April and the year-ahead outlook improved. Cost pressures remained modest from this giant sector.

In India, their services sector saw new orders and output expand at a quicker pace supporting hiring activity. They also reported a mild reduction in inflationary pressures.

(Things aren't so good in the Russian services sector.)

In the EU, they report rising cost pressure for producers, all related to higher fuel prices. Overall they are up +2.0% in April from a year ago, but up +3.2% from March. There is quite a wide range of impacts depending on the country.

Internationally, a new report tallying global debt found it at US$353 tln, and a strong shift away from US treasuries and toward big new demand for Japanese and European government bonds. They also found the overall debt:GDP ratio remained stable.

The UST 10yr yield is now just on 4.35%, down -7 bps from this time yesterday. The key 2-10 yield curve is now at +48 bps (unchanged). Their 1-5 curve is now at +27 bps (-5 bps) and the 3 mth-10yr curve is at +71 bps (-5 bps). The China 10 year bond rate is now at 1.76%, up +1 bp. The Japanese 10 year bond yield is unchanged at 2.50%. The Australian 10 year bond yield starts today at 4.91%, down -5 bps. 

Wall Street is ending its Wednesday with the S&P500 up +1.4% and a new record high. Overnight, European markets were up between Paris's +2.1% drop and Frankfurt's +2.9% rise. Yesterday Tokyo was closed for a holiday. Hong Kong was open and was up +1.2%. Shanghai also rose +1.2% and Singapore was up +0.1%. The ASX200 ended up +1.3%. 

The price of gold will start today up +US$121 at US$4680/oz. Silver is up +US$4 at just over US$77/oz.

American oil prices are down -US$6.50 at just on US$95.50/bbl, while the international Brent price is down -US$8.50 and now at US$101.50/bbl.

The Australian dollar is unchanged from yesterday at this time at 72.3 USc. Against the Japanese yen we are down -80 bps at ¥113.2. Against the euro we are down -10 bps at just on 61.6 euro cents.

The bitcoin price starts today at US$81,399 and up +0.1% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.3%.