China service sector expands; Japan service sector positive but subdued; Vietnam growth high but not high enough; question over US growth; OPEC meets; UST 10yr at 4.49%; gold and oil stable; AU$1 = 69.4 USc

Here's our summary of key economic events over the weekend that affect Australia, with news an OPEC decision overnight may bring lower fuel prices much sooner. But then, this will depend on the volume of Hormuz crossings.

But first, this coming week locally will be mainly about the Melbourne Institute's monthly inflation gauge, and about job ad changes.

In the US, their data releases will focus on service sector activity and existing home sales as they, like Europe, start to battle excessively hot conditions.

In Japan, the focus will be on defending the yen. They will also release June machine tool order data.

China will release June CPI and PPI data this week.

Over the weekend, China released their unofficial services PMI and it came in quite positive for June, similar to May. Growth rates for activity and new business remain strong. They recorded the strongest rise in employment since July 2024 and the fastest input cost inflation in over two years. Service sector firms there are optimistic about the immediate future. The overall result was better than the official China services PMI.

In Japan, their services PMI returned to growth in June, but cost pressures intensified, but here business confidence remained subdued. Which is in contrast to their quite positive factory PMI.

In South Korea we should probably note a very bumpy run recently by their stock market. It is dominated by major technology and semiconductor companies like Samsung Electronics and SK Hynix, so it is like the Nasdaq on steroids. This gives it unusual volatility, and that volatility has been on display in the past two weeks. This market hit a new record high on June 22 but has fallen -11% since. On Friday, it rose +5.8% however but even that still left it down -3% for the week. Over the past year, this equity market has risen a stunning +165% with most of it in 2026 and most of it tech-related.

In Vietnam, they posted a high Q2-2026 growth rate of +8.4%, building on their +7.8% Q1-2026 rate. (How can they report so quickly?) But this latest result will disappoint them because they have set a 2026 target of +10% and that now looks unlikely to be achieved, derailed somewhat by the Middle East conflict, also by missing their infrastructure build-out targets. Inflation eased to 4.7% in June from May's 5.6%, moving closer to the government's 4.5% inflation target this year. The World Bank has now reclassified Vietnam as an upper-middle-income economy, effective July 1.

The FAO global Food Price Index retreated for a second consecutive month in June, led down by falling cereals prices as harvests stay high, despite concerns in the US and Australia. Dairy prices eased slightly too, but meat prices stayed elevated. However it is vegetable oil prices that are keeping this index from falling faster.

In the US, the latest update of the AtlantaFed's GDPNow tracking reveals a sudden turn from high optimism about economic expansion, to a dour outlook. It has been rare that this model has come in lower than 'consensus' forecasts.

The UST 10yr yield is now just on 4.49%, unchanged from this time Saturday but a +12 bps rise from this time last week. The key 2-10 yield curve is now at +36 bps (up +1 bp). Their 1-5 curve is now at +28 bps (unchanged) and the 3 mth-10yr curve is at +87 bps (-1 bp). The China 10 year bond rate is unchanged at 1.74%. The Japanese 10 year bond yield is still at 2.77%, up +16 bps for the week and back to the 30 year-high levels we saw in May. The Australian 10 year bond yield starts today at 4.80%, down -2 bps from Saturday, up +4 bps for the week.

The price of gold has risen to US$4174/oz, unchanged from Saturday, up +US$100 from a week ago. Silver is now under US$62.50/oz, unchanged from Saturday too, up +US$3.50/oz for the week.

Oil prices are little-changed but slightly firmer from Saturday at just under US$69/bbl in the US, while the international Brent price is still at US$72/bbl. Hormuz transits picked up Friday but then on renewed uncertainties fell back again over the weekend with just 10 crude or product tankers exiting over the past 24 hours (1 dark with transponders off) but 15 entering for new loads (1 dark). Large tankers which are exiting are now choosing to do so in Oman-controlled lanes.

And we should probably note attacks on a ships in the Red Sea near Yemen over the weekend, adding another layer of uncertainty.

OPEC met over the weekend, and raised output by +188,000 barrels/day. They have Middle East members who need maximum revenues to recover from the conflict. So we may end up awash in oil and sharply lower prices.

The Australia dollar is unchanged from this time Saturday at just over 69.4 USc, up +70 bps from a week ago. Against the Japanese yen we are at ¥112. Against the euro we are still at just on 60.7 euro cents.

The bitcoin price starts today at US$62,563 and up +0.7% from this time Saturday, but up almost +4% from this time last week. Volatility over the past 24 hours has been low at just under +/- 0.8%.