US walks away from Hormuz in worse position; US Fed shifts to hiking bias; US crude oil stocks dive; Japan & Singapore exports surge; Russia contracts; UST 10yr at 4.46%; gold down and oil up; AU$1 = 70.7 USc;

Here's our summary of key economic events overnight that affect Australia with news the US-Iran deal temporarily reopens the Strait of Hormuz, and offers major concessions to Tehran. Tehran probably can't quite believe its luck here. Trump is battling widespread claims his Iran deal is worse (much worse) than the Obama deal he tore up.

In economic matters in the US, their central bank kept its policy rate range unchanged at 3.50%-3.75% for a fourth consecutive meeting, in a unanimous decision and as expected. But updated dot plot projections show that 9 officials foresee at least one quarter-point hike this year, with 6 anticipating at least two. Another 9 expected no move or a cut. They see core inflation rising from 2.7% at their prior forecast to 3.3% by the end of the year, and removed their easing bias. And the next move will be up. This uncertainty got the market's attention.

Wall Street retreated, bond yields rose, and the USD rose. Gold fell.

But Kevin Warsh's influence can be seen in the fact that the decision announcement had very little detail or context. He is not a fan of central bank transparency.

Separately, US mortgage applications fell last week and across the board even though the benchmark interest rate was unchanged (at 6.60%).

However American retail sales rose in May from April and by more than expected to be +5.2% higher than year-ago levels. But most of this was due to higher fuel prices. Without fuel, these sales were up +3.6% when inflation was up +4.2%.

US pending home sales rose more than expected too, with sales volumes up +4.8% from May a year ago. That is two months in a row of good gains although on the back of quite weak results a year ago.

US crude oil stocks fell an outsized -8.3 mln barrels last week, the largest weekly fall in eight weeks and the most concentrated drawdown of the strategic reserve levels since the pandemic. In fact, their strategic reserves are at their lowest level now since March 1985, a 40 year low.

Japan said its exports were up +17.0% in May from a year ago to US$59 bln and its imports were up +12.5% over the same period. Export customers were dominated by China (+17.9% growth ), the US (+12.5%), ASEAN (+20.0%), and the EU (+14.5%).

Meanwhile Japan reported its machinery orders were strong too, up +15.6% in April from a year ago, up +8.7% from March. Japan really has its mojo back.

In Singapore, they said their exports rose a whopping +38% in May from a year ago to a record high S$87 bln (US$51 bln) in the month, a far larger increase than anyone saw coming. It is clear that despite the US shenanigans on tariffing trade, global trade is in fine shape without them.

In China, they are tightening their grip on the rare earth minerals sector with new regulations that cover everything from mining rights and production, to stockpiling and environmental restoration. Everything in the sector is now a national security priority.

It might also be worth noting that Russia said its economy shrank in Q1-2026, its first admission of a retreat outside the pandemic period. And the downturn occurred despite sharp rises in the prices of key Russian exports, including oil, natural gas, coal, industrial metals, and grain.

The UST 10yr yield is now just on 4.49%, up +7 bps from this time yesterday immediately after the Fed decision announcement. The key 2-10 yield curve is now at +36 bps (-1 bp). Their 1-5 curve is now at +30 bps (-1 bp) and the 3 mth-10yr curve is at +78 bps (unchanged). The China 10 year bond rate down -1 bp at 1.73%. The Japanese 10 year bond yield is down -4 bps at 2.60%. The Australian 10 year bond yield starts today at 4.77%, down -1 bp from yesterday. And the NZ Government 10 year bond rate is down -7 bps at 4.41%.

Wall Street is didn't like the Fed's decision with the S&P500 down -1.2% and the Nasdaq down -1.3% immediately following it's announcement. Overnight, European markets closed between Frankfurt's +0.1% rise and Paris's -0.2%. Tokyo ended its Wednesday session up +0.7%. Hong Kong however fell -0.7% but Shanghai was up +0.4%. Singapore rose +1.2%. The ASX200 ended its Wednesday session up +0.5. 

The price of gold has retreated -US$68 from yesterday to US$4273/oz after the Fed decision. Silver is down -US$2 at US$68/oz.

Oil prices are up +US$1 from yesterday at just under US$76.50/bbl in the US, while the international Brent price is now just on US$79/bbl and up +50 USc. Hormuz transits are picking up with eight crude or product tankers exiting over the past 24 hours and 16 entering for new loads. (Normal is 60 in each direction.)

The Australian dollar is unchanged from this time yesterday at just on 70.7 USc. Against the Japanese yen we are down -10 bps at ¥113.3. Against the euro we are up +10 bps at just on 61 euro cents. 

The bitcoin price starts today at US$66,016 and up +0.2% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.3%.