Eyes on US earnings reports; Waller turns hawkish; US deficit blows out; India inflation rises; China braces for storms; OPEC turns glum; UST 10yr at 4.61%; gold falls; oil rises on Strait closure & tolls; AU$1 = 69.2 USc

Here's our summary of key economic events overnight that affect Australia on Bastile Day, with news that at the close of business today in New York, the Q2-2026 earnings season will kick off with major banks JP Morgan, Bank of America and Wells Fargo leading the pack. They will be reporting into a market that is jittery over the rebounding crisis in the Middle East.

Adding to the confusion, Trump said the US is imposing a 20% toll on all ships passing through the Strait of Hormuz. That will close all traffic except Iranian-linked vessels.

Separately, yesterday tech stocks from New York to Shanghai all took a beating.

Meanwhile, US Fed governor Waller spoke today, emphasising he is watching the inflation signals closely and warning that more rate hikes may be necessary. He warned about the impact of "tariffs, energy prices, and spillovers from demand for the AI buildout". But he is wary of recent history, acknowledging that this evolving situation has different risks and "we shouldn't fight the last war" on inflation. We are seeing a long-time dove turning hawkish on the need for action on inflation.

That comes as the US federal government posted a much wider deficit than expected, boosted by tariff refunds. Over the past nine months, that deficit has swelled to -US$1.36 tln on track for another unsustainable record, only one Trump could engineer with his dodgy fiscal strategies.

In India, CPI inflation rose to 4.4% in June, its highest since December 2024 and slightly more than expected. Food prices rose +5.3% with tomato prices up almost a third on this year-on-year basis.

In China, their climate and weather authorities are warning that there is an elevated chance of more serious storms this year. They have just had their first major one, and they say more than six national emergency level storms are expected before the end of their summer.

Here in Australia, we should probably note that the Xero CEO has sold all her own shares in the company, a somewhat startling signal.

Meanwhile OPEC is also turning glum. Their July Monthly Oil Market Report lowered the 2026 global oil demand growth forecast to 780,000 bpd, citing economic instability from the geopolitical conflict. They see reduced demand in major markets.

The UST 10yr yield is now just on 4.61%, up +5 bps from this time yesterday. The key 2-10 yield curve is now at +35 bps (little-changed). Their 1-5 curve is now at +26 bps (+1 bp) and the 3 mth-10yr curve is at +92 bps (+5 bps). The China 10 year bond rate is unchanged at 1.73%, down -1 bp for the week. The Japanese 10 year bond yield is now at 2.78%, up +1 bp. The Australian 10 year bond yield starts today at 4.89%, up +5 bps from yesterday.

Wall Street has started its week on a down note with the S&P500 dropping -0.7% and the Nasdaq down -1.5%. Overnight, European markets were little-changed with London holding while Paris rose +0.3%. Yesterday, Tokyo ended its Monday trade down -1.9%. Hong Kong firmed slightly however, up +0.2%. But Shanghai was down a large -2.1%. Singapore ended essentially unchanged. The ASX200 ended its Monday trade also essentially unchanged.

The price of gold has fallen to US$3994/oz, down -US$126/oz from yesterday. Silver is now just under US$57.50/oz, down -US$2.50 from yesterday.

Oil prices are up +US$6 from yesterday at just on US$77/bbl in the US, while the international Brent price is now just over US$82/bbl. Hormuz transits have essentially dried up as the hot conflict explodes again and Iran declaring the Strait 'closed'. There have been just 6 crude tankers (1) and 5 cargo ships exiting over the past 24 hours and 5 of those tied to Iran (0 dark with transponders off) but only 5 entering for new loads, all Iran-linked (1 dark).

The Australian dollar is down -30 bps from yesterday at just under 69.2 USc. But against the Japanese yen we are little-changed at ¥112.5. Against the euro we are down -10 bps at just on 60.8 euro cents.

The bitcoin price starts today at US$61,935 and down -3.4% from this time yesterday. Volatility over the past 24 hours has been modest however at just under +/- 1.9%.