Market News

Australian private capital expenditure surged 6.5% in Q1, driven by data centre equipment investment, while April household spending fell 1.1%, more than double the expected decline.

Summary: Source: Australian Bureau of Statistics, Private New Capital Expenditure and Expected Expenditure, March 2026 quarter, released 28 May 2026

• Total new private capital expenditure rose 6.5% quarter-on-quarter in Q1, well above the 1.0% forecast and the prior 0.4% reading
• The ABS attributed the lift specifically to investment in data centre equipment
• Plant and machinery capex rose 18.1% quarter-on-quarter; buildings and structures fell 3.8%, reversing a prior gain of 2.3%
• Estimate 2 for 2026-27 capital expenditure is $173.4 billion, 9.9% above Estimate 1 for…

Oil up a little on the news:

• Fars News Agency report three explosions east of Bandar Abbas
• Iranian air defense systems activated
• United States has carried out a defense operation in Bandar Abbas, Iran, official tells Faytuks Network, adding that “this does not affect the ceasefire”

Jefferson, Lane and Greene are all speaking in Tokyo. I'll have more to come on this separately

• AUD/NZD experiences the largest single-day decline since 2022 on divergent drivers
• US sells 5-year notes at 4.182% vs 4.181% WI
• Trump: We're not there yet on Iran deal, not satisfied with it
• Trump says Iran would not get sanctions relief in exchange for giving up enriched uranium
• ECB's de Guindos says current shock is causing lower economic growth and higher inflation
• Tech sector tumbles: Healthcare and consumer cyclicals lead the charge
• White House on X indirectly denies the Iran's state TV reported MoU draft
• US Richmond Fed May composite index +13 vs +3 prior
• The major US stock indices open higher on US-Iran deal optimism but gains fade
• Iran's state TV says it has a draft of the initial unofficial framework for the MoU
• Weekly US ADP pulse 35.75K…

• Prior was 3.955%
• Bid to cover at 2.34 vs 2.33 prior
• Primary Dealers 12.8%
• Direct 12.3%
• Indirect 74.9%

A negligible tail of 0.1 bps. Treasury yields have been falling steadily since the May 19 highs. The optimism regarding a US-Iran deal helped ease inflation concerns as it also contributed to lower oil prices. Nevertheless, an agreement has not been reached yet and the Strait of Hormuz remains closed.

For background, the US Treasury funds federal borrowing by selling marketable securities, bills, notes, bonds, FRNs, and TIPS, through regularly scheduled public auctions that set the clearing yield. The 5-year note is auctioned monthly: announced in the second half of the month, sold a few business days later, and issued on the last calendar…

• We're not there yet on an Iran deal. We're not satisfied with it.
• Maybe we go back and finish it, maybe we don't.
• Iran is negotiating on fumes.
• Iran can't have a nuclear weapon.

Rubio's comments:

• Trump preference is to negotiate with Iran.
• I think there's been progress towards a deal.
• We will see over the next hours and days.

The fact that Trump is saying that Iran is negotiating on fumes is telling you that he thinks he has the upper hand, and Iran has no leverage whatsoever. I'm afraid Trump won't compromise on anything with the stock market trading at record highs.

You can follow it live below:

• Full article here

During a phone call with PBS News, Trump explicitly stated that Iran would not receive sanctions relief in exchange for giving up its highly enriched uranium. This comes amid ongoing efforts between the US and Iran to end three months of conflict and reach an agreement on a memorandum of understanding.

On Truth Social, Trump claimed that negotiations with Iran were "proceeding nicely" and he was scheduled to meet with his Cabinet today to further discuss these diplomatic efforts. Iran has recently accused the US of acting in "bad faith" following military strikes during peace talks.

This doesn't sound like progress to me. Iran wants removal of sanctions, unfreezing of assets, the lifting of the US blockade and limited…

The Official White House Rapid Response account on X has indirectly denied the Iran's state TV MoU draft reported earlier in the session. The initial market gains have been erased anyway as Iran's state TV also added that no agreement has been reached yet, so all in all we are still waiting for something concrete.

There's been lots of noise recently about this Memorandum of Understanding and extra caution is needed. The signal is that nobody wants to restart the conflict, so that's positive but it's also largely priced in. The most important thing is the reopening of the Strait of Hormuz.

If this situation drags on for longer, we risk going into the June FOMC meeting with oil prices still elevated and uncertainty still high. The Fed might…

• Prior was +3
• Services index +14 vs +9 prior
• Manufacturing shipments +16 vs -2 prior

Fifth District manufacturing activity improved in May, according to the most recent survey from the Federal Reserve Bank of Richmond. The future indexes for shipments and new orders increased further into positive territory. The expectations index for employment rose notably to 23 from 7. The local business conditions index decreased to 5 in May from 10 in April. Meanwhile, the future local business conditions index rose to 17 from 3. The average growth rates of prices paid and prices received decreased somewhat in May. Firms expected growth in prices paid to moderate slightly over the next 12 months.

For background, the Federal Reserve Bank of Richmond's…

• Prior war 42.25K

The weekly and monthly ADP reports have been pointing to a resilient and stable labour market. Their focus is on the inflation mandate now.

For background, the NER Pulse is a weekly private-sector employment tracker launched in late 2025 by ADP Research in collaboration with the Stanford Digital Economy Lab. It serves as a high-frequency companion to the long-running monthly ADP National Employment Report (NER), which has delivered snapshots of U.S. private-sector hiring for nearly two decades and is built on anonymized payroll data covering more than 26 million U.S. employees, roughly one in six private-sector workers.

ADP positioned the new release as a response to an economy being reshaped in real time by AI adoption,…

Iran's state TV is saying that it has a draft of the initial unofficial framework for the Memorandum of Understanding (MoU) with the US. According to the draft, US military forces will withdraw from vicinity of Iran and lift the naval blockade. In return, Iran has committed to restoring the number of commercial transit ships through Hormuz Strait to pre-war levels within one month.

The management and route of ship traffic through Strait of Hormuz will be handled by Iran in cooperation with Oman. If a final deal is reached within 60 days, this agreement will be approved in the form of a binding UN Security Council resolution. The Islamabad memorandum framework is not yet finalized and no step will be taken by Iran without "tangible…

Headlines:

• US and Iran know what the puzzle pieces are, but can they fit them all together?
• US futures continue to push up as investors stay more optimistic
• USD/JPY continues to nudge higher in testing Japan's intervention limits
• Gold drops to two-month lows as precious metals struggle despite US-Iran optimism
• Fed's Kashkari says far too soon to predict what the next policy move should be
• French consumer sentiment slumps further in May, falling to lowest since March 2023

Markets:

• WTI crude lower by 3.5% to $90.50
• DAX up 0.6% and CAC 40 up 0.9%
• S&P 500 futures up 0.3% on the day
• US dollar steady, little changed; AUD down after softer CPI data, NZD up on more hawkish RBNZ
• US 10-year yields down 1.6 bps to 4.475%
• Gold down 1.3% to $4,447

It was another…