Indonesia cuts a trade deal with the US
Trade officials the world over will now use the Indonesia deal as a measure of their own ability to do business with the US.
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News.com.au
an hour ago
- News.com.au
US Fed set to hold firm against Trump pressure
The Federal Reserve is expected to defy aggressive pressure from President Donald Trump and keep interest rates unchanged Wednesday, though divisions about the best response to tariff risks may bubble to the surface. The US central bank's decision, due to be announced at 2:00 pm US eastern time (1800 GMT), comes amid a flurry of data releases this week, including an early estimate showing the world's biggest economy returned to growth in the second quarter. The Fed is also set to take into account an incoming raft of new tariff rates Trump has said he would impose on Friday. A spokesperson for the central bank said Wednesday that its policy meeting began at 9:00 am as scheduled. "It's a high-wire act for the Fed, because they're balancing a lot of risks without a net," KPMG chief economist Diane Swonk told AFP. "Some of the most tariff-sensitive sectors have begun to show price increases, but the bulk of any inflation bump due to tariffs is still ahead of us," Swonk added in a recent note. Meanwhile, there are cracks in the foundation when it comes to the labor market, she said, adding that "it doesn't take much of a pick-up in layoffs to have a bigger effect on demand." Analysts broadly expect the Fed to hold interest rates steady at a range between 4.25 percent and 4.50 percent. Its last reduction was in December. The outcome would vex Trump, who has lashed out repeatedly at independent Fed Chair Jerome Powell for not lowering rates sooner -- calling him "too late," a "numbskull" and "moron." Trump, citing Wednesday's better than expected GDP growth figure, said Powell "must now lower the rate." The repeated attacks have fueled speculation that Trump may attempt to fire Powell or otherwise pressure him to resign early. Powell will likely sidestep such questions at a press conference Wednesday, said JP Morgan chief US economist Michael Feroli in a note. Powell's term as Fed Chair ends in May 2026. - 'Hyper-politicized' - Analysts are also watching for potential internal disagreements over the rate decision. Economists anticipate potentially two dissents among Fed policymakers -- Fed Governors Christopher Waller and Michelle Bowman -- as they had previously signalled willingness to reduce rates as soon as in July. "Dissents by two governors are rare and haven't occurred since 1993," said Nancy Vanden Houten, lead US economist at Oxford Economics. Waller flagged this month that indicators do not point to a particularly healthy private sector jobs market. While he did not commit to a decision, he has made the case for a July rate cut and stressed that policymakers need to respond to real-time data. Analysts said financial markets would already have braced for two dissents given officials' recent remarks. But Swonk warned: "What I worry about is how, in this hyper-politicized environment, that's perceived." "Multiple dissents by governors, who are closest to the Chair, could signal an unintended view that they have lost confidence in the chairman," Swonk noted. Trump has called for interest rates to be dropped by as much as three percentage points. - Cruel summer - "It's going to get tougher over the summer," Swonk said. "Tariff-induced price pressures are starting to filter through the economy," said EY chief economist Gregory Daco in a note. Companies are citing weaker earnings and higher input costs, while elevated consumer prices are beginning to weigh on retail sales. "More demand erosion is likely in the months ahead," Daco said. He expects Powell to "strike a tone of cautious patience" in his press conference after the rate decision. Powell would likely reiterate that policy remains data-dependent, and that the Fed can adjust this as conditions evolve, Daco added. Looking ahead, Swonk said, "the real issue will be, what does he say at Jackson Hole now?" Powell typically addresses an annual central banking conference in Jackson Hole, Wyoming, and it takes place this year in late August. "The next shoe to drop is: Will there be enough data by the time we get to Jackson Hole to open the door to a September rate cut?" Swonk said.
News.com.au
2 hours ago
- News.com.au
US economy returns to growth in second quarter on tariff turbulence
The US economy returned to growth in the second quarter, government data showed Wednesday, as analysts warned of distortions due to shifting trade flows over President Donald Trump's tariffs. The world's biggest economy expanded by an annual rate of 3.0 percent in the April to June period, beating analysts' expectations and reversing a 0.5 percent decline in the first three months of the year, according to the Department of Commerce. This swiftly prompted Trump to ramp up pressure for an interest rate cut, saying on social media that Federal Reserve Chair Jerome Powell "must now lower the rate," using his critical nickname for the central bank chief in doing so. The Fed is due to announce its latest interest rate decision Wednesday afternoon. A consensus forecast by had expected a 2.5 percent GDP growth rate. At the start of the year, businesses rushed to stock up on products to avoid the worst of Trump's threatened tariff hikes -- but the build-up is now unwinding. "The increase in real GDP in the second quarter primarily reflected a decrease in imports, which are a subtraction in the calculation of GDP," said the Commerce Department. The uptick also reflected an increase in consumer spending, the report said. The imports surge in the first quarter this year led to the largest drag on GDP growth from net exports on record, analysts at Goldman Sachs noted recently. Analysts widely expected a bounce back as imports cooled but said this might not be sustainable. They warned that Trump's incoming wave of tariff hikes could cause an uptick in inflation, which would in turn erode households' spending power. This stands to weigh on consumption patterns. "It's very much distorted by the trade flows and inventory," said Nationwide chief economist Kathy Bostjancic of second quarter growth. But the acceleration is not sustainable, she told AFP. Since returning to the US presidency, Trump has threatened and rolled out wave after wave of fresh duties. These included a 10 percent levy on almost all US partners, higher duties on steel, aluminum and auto imports, as well as separate actions against Canada and Mexico over illegal immigration and illicit fentanyl flows. In April, the Trump administration separately took aim at the world's number two economy, China, as Beijing pushed back on US tariffs. Both countries ended up imposing tit-for-tat tariffs on each other's products, reaching triple-digit levels and bringing many trade flows to a halt before Washington and Beijing reached a temporary agreement to lower duties. After two days of talks in the Swedish capital of Stockholm this week, negotiators signaled there could be an extension of the truce -- although the final call depends on Trump. - 'Clear deceleration' - Bostjancic expects that underlying activity driving US growth will be moderating, although not collapsing. "The US economy continues to navigate a complex set of crosscurrents, obscuring a clear reading of its underlying momentum," said EY chief economist Gregory Daco in a note ahead of the GDP report. But he added that one trend is evident, which is that "economic activity is decelerating even as inflationary pressures are reemerging." "Tariff-induced cost pressures, persistent policy uncertainty, severely curtailed immigration, and elevated interest rates are collectively dampening employment, business investment and household consumption," Daco said. Analysts are closely eyeing the impact of Trump's tariffs on inflation, with economists warning that the duties could fuel price increases. They expect to learn more from data in the summer months. All of this could impact consumer spending -- a key economic driver. "The trend in GDP growth is best analyzed by considering the first and second quarters together," said Samuel Tombs, chief US economist at Pantheon Macroeconomics. He said in an earlier note that the US economy would probably "lose more momentum" in the third quarter, when consumer prices for imported goods likely will rise sharply.
Mercury
8 hours ago
- Mercury
CEL moves closer to early cashflow
Don't miss out on the headlines from Stockhead. Followed categories will be added to My News. Special Report: Challenger Gold is on track to realise its plans to toll treat gold ore from its Hualilan project in Argentina after Austral Gold said refurbishment of its Casposo plant is progressing to plan. Challenger Gold on track to start Hualilan toll treatment plan that will deliver robust cashflow Refurbishment of Austral Gold's Casposo plant progressing to plan with commissioning in August Cashflow from toll treatment to fund plans for standalone development at Hualilan The Hualilan project in San Juan is the subject of a three-year toll milling strategy that could deliver estimated EBITDA of A$136 million, a post-tax NPV of US$50.5 million, and cumulative post-tax-free cash flow of US$56.7 million using conservative spot prices of US$2500/oz for gold and US$27.50/oz for silver. Using a gold price of US$3300/oz, which is a little less than US$30 below spot prices, this EBITDA increases to A$221 million. The company will capitalise on the current high gold price to generate early cash flow. What makes this even more lucrative for Challenger Gold (AX:CEL) is that this potential for robust returns is based on just 3% of the current 2.8 million ounce resource at Hualilan. This toll treatment strategy outlined in a pre-feasibility study requires an upfront capital investment of just US$8.9 million with payback within three months. Watch: Met test success paves way for broader gold development Austral plant Central to this plan is the use of Austral Gold's (ASX:AGD) Casposo plant that is 165km away via sealed road. AGD has now said that commissioning of the plant remains on target for August 2025 with the majority of Q2 key activities having wrapped up and the remaining tasks in progress and on track for completion in early August. So far, the primary crusher refurbishment has been completed and is ready for operation. Installation of a sampling tower is currently underway in this area to improve grade control of the material to be sourced from Hualilan. The SAG mill relining is underway and expected to be wrapped up with recently arrived materials, while the SAG engine repair (part of the grinding circuit) is also finished. Installation of new hydrocyclones is underway and awaiting the vendor's delivery date, while the repair of engines and reducers for leaching tanks and the counter current decantation have also wrapped up. The filter band refurbishment is underway and modifications and improvements to the piping and ducts have also now completed. This will allow for toll processing of Hualilan material to begin in November 2025, which is in line with CEL's schedule. Toll treatment will see the processing of at least 450,000t of near surface Hualilan material for more than three years. Cashflow from the agreement will be allocated towards the construction of the larger stand-alone Hualilan gold project, which boasts a high-grade core of 1.6Moz at 5g/t gold. This article was developed in collaboration with Challenger Gold, a Stockhead advertiser at the time of publishing. This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions. Originally published as Challenger Gold closer to Hualilan toll milling with Casposo plant refurb on track
