US trade deficit stays high; Chicago PMI gets stockpiling boost; Canada close to recession; Japan sentiment and retail rise; Taiwan posts outsized GDP growth; UST 10yr at 4.43%; gold firms again; oil lower; AU$1 = 71.9 USc

Here's our summary of key economic events overnight that affect Australia with news the US has still not signed off on the tentative negotiated US-Iran deal. Markets are assuming they will however. And that is despite the mixed signals coming from the White House as the conflict enters its fourth month.

Meanwhile, the US trade deficit widened to -US$82.4 bln in April for merchandise trade, and back to similar to what it was between 2021 to 2025, except for the rush period to beat the tariffs. For the five years prior to that is was averaging -US$65 bln/month.

Beating the post-tariff and Strait of Hormuz stress as seen the US Chicago PMI showing the stockpiling frenzy on full display. It surged in May to its highest in over four years. The sharp recovery in the index reflected fresh traction in business activity from new orders, although few are export orders.

There have been a range of Fed speakers out overnight, most saying a Fed rate hike will likely be on the table at their June 17 meeting (but not Trump ally Bowman).

Canada said it is close to being recession. Analysts had expected Q1-2026 growth to be +0.1% but it actually came in unchanged, after Q4-2025's -0.2%. Interestingly, on a per capita basis, real GDP increased +0.2% in the quarter, as the population declined for a second consecutive quarter and GDP remained unchanged. You have to wonder if this low growth will be enough to spur a Canadian rate cut, when inflation remains at 2.8% there.

Japanese consumer sentiment recovered somewhat in May after falling from its seven year high in February after the Middle East conflict started.

Japanese retail sales have risen to a one year high in April, up +2.1% from a year ago and besting forecasts of +1.3%. It is being driven by resilient consumer demand from ongoing government stimulus and rising wages.

Taiwan posed a +14.6% GDP expansion rate for March 2026 from the same quarter a year ago, easily its fastest since 1978. Over the whole year it has been a spectacular +9.6% expansion.

The UST 10yr yield is now just on 4.43%, down -2 bps from this time yesterday, down -12 bps for the week. The key 2-10 yield curve is now at +44 bps (+1 bp). Their 1-5 curve is now at +36 bps (-2 bps) and the 3 mth-10yr curve is at +75 bps (-3 bps). The China 10 year bond rate is soft at just under 1.72%. The Japanese 10 year bond yield is down -4 bps at 2.66%. The Australian 10 year bond yield starts today at 4.85%, unchanged from Friday, down -7 bps for the week. 

Wall Street is firmer today with the S&P500 up +0.2%, up +1.5% for the week. The Nasdaq is up +0.4%, up +2.4% for the week. Overnight, European markets ended mixed between Frankfurt's no-change and London's -0.2% dip. Yesterday, Tokyo closed up a strong +2.5%. Hong Kong was up +0.7% but Shanghai -0.7%. Singapore ended up +1.0%. The ASX200 ended its Friday session up +1.6%, the same for the week.

The Fear & Greed index is still in the 'greed' zone where it has been for the past six weeks.

The price of gold will start today up +US$49 at US$4555/oz, up +US$40 for the week. Silver is down -50 USc at just over US$75.50/oz.

Oil prices have fallen -US$1.50 to just on US$87.50/bbl in the US, while the international Brent price is now at US$91.50/bbl and down -US$2/bbl. A week ago these prices were US$96.50 and US$103.50/bbl respectively.

Urea prices are falling back with the oil price, but this is not the case for sulfur, which remains close to its record highs.

The Australian dollar is up +30 bps from yesterday at this time at 71.9 USc, up +50 bps for the week. Against the Japanese yen we are up +40 bps at ¥114.5. Against the euro we are also up +10 bps at just under 61.6 euro cents.

The bitcoin price starts today at US$73,330 and down -0.2% from this time yesterday, but down -4.3% for the week. Volatility over the past 24 hours has been moderate at just under +/- 1.3%.