US moves to hold back UST yield rises; Fed reveals inflation pressure reactions; USMCA deal close; Japanese machinery orders jump; UST 10yr at 4.71%; gold down; oil prices up again; AU$1 = 71.1 USc

Here's our summary of key economic events overnight that affect Australia, with news the Trump Administration has been unnerved by the rising yield investors are demanding for their long-dated bonds. Thy have now moved to "provide liquidity support" for the UST 30 year bond, effectively spending deficit dollars to bid the yield down and the price up on secondary markets. They didn't like the free-market signals, so they are using resources to twist them. Bond professionals are sceptical today's move is anything but a short-term salve because they are still raising huge new funds to support their deficit spending, more than US$½ tln in just the past 60 days.

It is a move that has seen the USD fall, gold rise, and pushed up the price of commodities including crude oil. Bitcoin sparked back into life with a sharpish rise too.

Elsewhere today, the minutes of the July Fed meeting were released today, the one where there were three dissenters all who wanted to raise rates to counter inflation threats. And it also revealed many non-voting members supported hiking rates too. But to be fair subsequent data has shown that their labour market is cooling rather faster than they anticipated, and that inflation has dipped slightly. It is still well above their policy target however. Today's Treasury interventions and the related inflation-inducing market reactions will be being watched by the twelve voting members closely.

Meanwhile, US mortgage applications fell slightly last week, staying weak, and back to levels they were at in the first half of 2025.

And US commercial crude oil stocks rose sharply last week taking the rising run to three straight weeks. However, their strategic reserves fell again and is now a levels so low that there are concerns about the physical infrastructure.

The USMCA renegotiation deadline with Canada has been pushed back a few days. The Americans say it is because a deal is close. The Canadians say there is still details to be agreed although a deal is close and one far different to the "50%" threat. It will be interesting to see how the Canadian dairy sector fares in all this.

The exchange rate market reaction to the US Treasury move has taken the pressure right off the Japanese yen.

Japanese machinery orders continued their yo-yo pattern in June, now up +16.9% from a year ago (excluding volatile items). Export orders were particularly strong.

In Australia, Big Tech is raising bond financing to support their global AI rollout ambitions. Google raised more than AU$5 bln yesterday after being flooded with more than AU$18 bln in market offers. This is a honeypot sure to attract more Big Tech borrowers.

The UST 10yr yield is now just on 4.65%, down -6 bps from this time yesterday. The 30 year yield is at 5.20% and down -8 bps. The key 2-10 yield curve is now at +47 bps (down -6 bps). Their 1-5 curve is now at +37 bps (-1 bp) and the 3 mth-10yr curve is at +98 bps (-4 bps). The China 10 year bond rate is up +1 bp to 1.68%. The Japanese 10 year bond yield is now at 2.90%, down -5 bps. The Australian 10 year bond yield starts today at 5.02%, down -3 bps.

Wall Street has stopped falling today with the S&P500 now up +0.2% and the Nasdaq also up +0.2%. Overnight, European markets were little-changed between London's +0.1% and Frankfurt's -0.1%. However Tokyo ended its Wednesday session down another very sharp +3.2%. But Hong Kong was flat again (+0.1%). Shanghai fell an outsized 2.4%. Singapore ended down -0.1%. The ASX200 ended its Wednesday session down -0.2%. 

The price of gold is up sharply, now at US$4503/oz, up +US$150 from yesterday at this time. Silver has risen +US$2 to just over US$66.

Oil prices are up another +50 USc from yesterday at just over US$85.50/bbl in the US, while the international Brent price is now just over US$91.50/bbl. Hormuz transits have stayed very low although there is a bit more activity with four crude tankers and 5 cargo ship exiting over the past 24 hours (2 dark with transponders off) and six entering for new loads (4 dark), again all Iran-linked. The Red Sea activity is still only about 20 exits at the Yemen chokepoint, little-change.

The Australian dollar is up +20 bps from yesterday at just over 71.1 USc. Against the Japanese yen we have fallen -30 bps to ¥112.8. Against the euro we are down -20 bps at 61 euro cents.

The bitcoin price starts today at US$68,163 and up a sharp +5.4% from yesterday. Volatility over the past 24 hours has also been high at just on +/-3.7%.