Washington's Influence Diminishes Compared To Its Past Strength

Australia's Economic Situation

The International Monetary Fund (IMF) has warned Australia that if the government continues its spending habits, interest rates will need to remain high. This has led to discussions about the Reserve Bank of Australia's (RBA) confidential meetings with private entities such as investment banks, which some believe could give certain parties an unfair advantage. A Green Party Senator, who is also an economist and former RBA employee, has stated that the setting of interest rates by the Reserve Bank is a political exercise, contradicting the belief that it's an independent process.

France and Germany's Financial Developments

In France, Prime Minister Barnier has proposed €60bn of tax increases and spending cuts, which would only reduce the country's fiscal deficit to 5% of GDP if approved. Meanwhile, in Germany, there are concerns about the future of German car manufacturers in China's market, as well as Chinese electric vehicles in the German market.

European Commission's Deforestation Regulation

The European Commission has suggested delaying the implementation of the EU Deforestation Regulation until December 2025 for large companies and June 2026 for smaller businesses. This is to allow all stakeholders to prepare for effective implementation. The proposal has been welcomed by the agri commodity and pulp/paper markets, leading to a decrease in prices.

ECB's Rate Cut and US East Coast Port Strike

The European Central Bank (ECB) is considering an additional 25bps rate cut in October, despite core inflation remaining persistent. On the other side of the Atlantic, the first US East Coast port strike since 1977 is causing global disruption, with President Biden siding with the union. The White House has called for the removal of surcharges introduced by major shipping lines on October 1, but this is unlikely to alleviate congestion and shortages of goods and containers.

Japan's Hiking Cycle and US-Israeli Relations

In Japan, Prime Minister Ishiba and Bank of Japan Governor Ueda have suggested that the country's hiking cycle has come to an end. Meanwhile, the US has supported a "proportionate" Israeli strike on Iran following a recent missile attack, although this is not in line with Israel's strategic doctrine.

G7 Sanctions on Iran and De-dollarisation

The G7 has announced that there will be further sanctions on Iran, although it is unclear whether Russia and China will comply. As countries move away from the US dollar due to the threat of sanctions, there will be a need to compare not only USD/XXX but also different commodities. For example, Russia and Pakistan are planning to exchange chickpeas and lentils for tangerines and potatoes due to difficulties in making mutual payments.

Saudi Arabia's Oil Warning and US Tariffs on Chinese Solar Firms

Saudi Arabia has warned that oil prices could fall to as low as $50 if OPEC+ members continue to ignore production curbs. Meanwhile, the US is planning to impose 300% tariffs on Chinese solar firms operating in Southeast Asia following an investigation by the Commerce Department into illegal trade practices.

Hong Kong Stock Market

With China on holiday, Hong Kong's stock market has seen a decrease, with the Hang Seng down by 3.3% and its tech index down by 5.9%. This could be due to profit-taking after a recent rally, or it could be a sign that the market has overestimated the benefits of China's recent policy changes.

Bottom Line

The shifting dynamics of global politics and economics are evident in these developments. The influence of Washington appears to be waning, while other nations grapple with their own economic and political challenges. What are your thoughts on these issues? Share this article with your friends and join the discussion. Don't forget to sign up for the Daily Briefing, available every day at 6pm.