Trump claims deal with Iran near (again); US producer prices jump; ECB raises rates; Indonesia stumbles; El Niño coming, officially; global growth sags; UST 10yr at 4.45%; gold recovers some as oil retreats; AU$1 = 70.3 USc

Here's our summary of key economic events overnight that affect Australia, with news Trump cancelled his latest planned military strikes claiming negotiating progress. That has been enough to settle financial markets today.

But first in the US, producer prices jumped +1.1% in May from April to be +6.5% higher than a year ago and to their highest since November 2022. And before the pandemic, their highest since this series began in 2009. Core PPI was up +5.1% and a similar high. These rises were more than expected.

US initial jobless claims also rose more than expected last week.to 228,400 and more than seasonal factors would have indicated. There are now 1.69 mln people on these benefits, less than a year ago and marginally less than two years ago.

In Canada, building consents were expected to fall back in April after the spurt in March, but they fell more than expected. Residential consents fell -5.5% and commercial consents fell an outsized -10.5%, both from the prior month. From a year ago, these consent levels were +2.5% higher, but that is on a value basis and construction PPI rose +2.8% in that same time.

In Europe, the ECB raised its policy interest rate by +25 bps to 2.4% as widely expected, it's first increase since 2023. It also raised its inflation expectation to 3% in 2026 and cut its growth forecast slightly to +0.8% this year and to 1.2% in 2027.

In Indonesia, their financial crisis is intensifying with their currency in freefall and their stock market too. The worry is it may drive a social crisis at our backdoor.

Here in Australia, the Melbourne Institute's survey of inflation expectations dipped in June to 5.5% following a dip in May after they peaked at 5.9% in April. The June result was well below the 6.5% jump some expected. But remember, the fuel tax concession (50%) is expected to end at the end of this month. If it does, it could put upward pressure on consumer inflation. (April actual CPI came in at 4.2% and the May result will be released on June 24.) In contrast wage expectations have remained unchanged for the past seven months.

The World Bank said overnight that global growth is leaking away due solely to the Middle East handbrake. It now sees 2026 expanding at 2.5%, and 2027 at 2.8%. These are slowdowns from 2025's +2.9% expansion and the prospect is slowest growth since the pandemic.

Meanwhile OPEC bravely says that world oil demand will recover quickly after the current Persian Gulf issues are resolved.

Global container freight rates rose another +3% last week to be level with the elevated rates of a year ago, when the Houthis were threatening the Red Sea access. It is all about outbound rates from China to Europe. In fact, China to the USWC rates are holding, but much lower on a year-ago basis. Bulk cargo rates fell -12% in the past week to be +68% higher than year-ago levels.

And official forecasters are now certain enough to warn of a severe El Niño climate event starting soon. The US issued its official warning after Australia said the chances are rising. We are being warned to expect 2026-27 to bring global risks of intense heat waves, sharp drops in rainfall in some key areas but deluges in other parts. India is expected to get a weak monsoon.

The UST 10yr yield is now just on 4.46%, down -8 bps for the day. The key 2-10 yield curve is now at +38 bps (-4 bps). Their 1-5 curve is now at +33 bps (-4 bps) and the 3 mth-10yr curve is at +81 bps (-8 bps). The China 10 year bond rate was unchanged at 1.75%. The Japanese 10 year bond yield is down -1 bp at 2.68%. The Australian 10 year bond yield starts today at 4.84%, down -6 bps from yesterday.

Wall Street has abandoned its 'fear' mode with the S&P500 recovering +1.8% in Thursday trade on a tech stock rebound. The Nasdaq is up +2.5%. Overnight, European markets were firmer between Frankfurt's +0.1% and both Paris and London up +0.5%. Yesterday, Tokyo was little-changed, up only +0.1%. However Hong Kong was down -0.7% and Shanghai eased -0.2%. Singapore recovered +0.6%. The ASX200 closed down -0.2% in Thursday trade. 

The price of gold has recovered +US$54 from yesterday at US$4152/oz. Silver is up US$1.50 at US$66/oz.

Oil prices are down -US$5 from yesterday at just under US$86.50/bbl in the US, while the international Brent price is now just on US$89.50/bbl. Hormuz transits are resuming today with 69 in the past 24 hours as owners rush to get their ships out.

The Australian dollar is up +20 bps from this time yesterday at just on 70.3 USc. Against the Japanese yen we are unchanged at ¥112.6. Against the euro we are up +10 bps at just on 60.8 euro cents. 

The bitcoin price starts today at US$63,223 and up +2.3% from this time yesterday. Volatility over the past 24 hours has been moderate at just under +/- 2.0%.