Here's our summary of key economic events overnight that affect Australia with news Hezbollah has rejected being part of a US-Iran accommodation, and Israel is continuing to attack it in Beirut and southern Lebanon. Despite this, markets still hope that a ceasefire can be agreed and the Strait of Hormuz opened. They are pricing it will, but it is shut still today.
Elsewhere and in the US, there were 97,000 announced job cuts in May, the most since January and the highest May since 2020 and the pandemic effect - and prior to that the highest since this tracking began in 1999. Most of the current layoffs are in the tech industry, and due to AI displacement.
Markets await the May non-farm payrolls report tomorrow and the expectation is for a modest +85,000 net jobs gain. This is despite the private ADP report indicating a higher level.
US initial jobless claims were little-changed last week at 188,000 although seasonal factors would have expected a solid -10,000 fall from that level. There are now 1.64 mln people on these benefits. lower than year ago levels.
And staying in the US, they have found the flesh-eating screwworm in their Texas cattle herd, another reason their beef industry is unlikely to be able to sustain its output.
The EU said its retail sales volume growth was weak in April, up +0.9%, up +1.0% in the euro area from a year ago. From the prior month, these volumes dipped. But this dip actually doesn't interrupt the rising trend in place since late 2023.
We are ending the week with the price of some key commodities like copper, tin and aluminium holding just off their recent peaks.
China is facing broad pushback at the level of subsidising it gives its steel industry. The OECD singled them out for criticism urging coordinated action against them to save capability around the world. A new round of defensive trade barriers will likely follow. Chinese over-capacity is enabled by these subsidies and it drives down prices everywhere as Chinese companies rush to quit stocks they can't sell at home.
The geopolitical toll on the logistics industry is starting to bite. Global container freight rates surged +23% this week from the prior week to be up basically level with year-ago levels (which were unusually high due to the Houthi attacks in the Red Sea). Most of this is due to the hikes in rates for the outbound China trade routes. Meanwhile bulk cargo freight rates eased back a minor -3% after their recent peak last week.
Here in Australia, AI is being put to use driving legal claims by amateurs. Courts are being flooded with AI written plaintiff claims, especially for personal injury, unfair dismissal, rent disputes, and 'pain & suffering' claims. New powers are being rushed through the Canberra parliament to try and stem the flood.
The UST 10yr yield is now just on 4.47%, down -2 bps from this time yesterday. The key 2-10 yield curve is now at +42 bps (+1 bp). Their 1-5 curve is now at +39 bps (unchanged) and the 3 mth-10yr curve is at +80 bps (-2 bps). The China 10 year bond rate is holding at just over 1.71%. The Japanese 10 year bond yield is up +3 bps at 2.67%. The Australian 10 year bond yield starts today at 4.91%, down -3 bps from yesterday.
Wall Street is firmer today with the S&P500 up +0.5% from yesterday but still below its record high. The Nasdaq is up only +0.1% despite the IPO frenzy. European markets were firmer too between Paris's +1.2% and London's +0.3%. Yesterday Tokyo ended down -1.4%. Hong Kong fell back -1.4%. Shanghai ended down -0.6%, while Singapore fell -1.4%. The ASX200 ended down -1.1%.
The price of gold will start today up +US$41 at US$4478/oz. Silver is up +50 USc at just under US$74/oz.
Oil prices are down -US$4 just over US$92/bbl in the US, while the international Brent price is now just over US$94.50/bbl and down -US$3.50. Hormuz remains shut however despite the pricing optimism.
The Australian dollar is firmer from yesterday at this time at 71.4 USc, up +10 bps. Against the Japanese yen we are up +20 bps at 114.2¥. Against the euro we are unchanged at just under 61.4 euro cents.
The bitcoin price starts today at just on US$63,013 and down another -4.3% from this time yesterday and still falling. Volatility over the past 24 hours has been high at just under +/- 3.9%.
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