The US Senate has confirmed Kevin Warsh as a US Federal Reserve governor, positioning him to succeed Jerome Powell as chair. Warsh's confirmation comes as the Fed faces political pressure from US President Donald Trump for interest-rate cuts. Warsh has indicated plans for significant changes at the Fed, including closer coordination with the US Treasury Department and a smaller balance sheet.

US President Donald Trump's summit with Chinese President Xi Jinping faces complications from the Iran war and US sanctions on Chinese refineries, though it aims to stabilize US-China relations. The best possible outcome is symbolic gestures to steady the relationship, but analysts are skeptical about the long-term impact of any agreements.

The ongoing conflict in the Strait of Hormuz has led to widespread hoarding by consumers and companies, causing shortages of essential goods like fuel and medical supplies. Governments are trying to manage the economic impact, with some imposing price controls and others boosting reserves. Economists suggest allowing market mechanisms to address shortages but acknowledge that vulnerable populations may need additional support.

Australia's 2026-2027 budget includes economic reforms, cost-of-living relief, and enhanced fuel security. The government is altering the tax treatment of investment properties to address housing affordability, which could pressure home prices and rents. The budget allocates more than $10 billion for fuel security amid global tensions and increases defense spending by $53 billion over a decade. To offset costs, the government is cutting spending on the National Disability Insurance Scheme.

Traders have increased bearish bets on US Treasuries amid rising oil prices and inflation, with interest-rate swaps pricing in a potential US Federal Reserve rate hike by mid-2027. A sell-off in Treasury futures has pushed 5-year yields above 4%, while options market activity indicates hedging against more rate hikes.

Wall Street is increasingly concerned about long-term inflation as expectations rise, with the five-year break-even rate reaching 2.7% and the 10-year rate hitting 2.5%. The latest consumer price index release has exacerbated these worries, leading to a decline in tech stocks and a rise in Treasury yields. The surge in inflation expectations is primarily driven by higher oil prices, posing challenges for the US Federal Reserve's interest rate policy.

Chicago Fed President Austan Goolsbee described the government's latest inflation report as "unexpectedly disappointing," highlighting particular concern over the persistent rise in services-related inflation. Although most numbers aligned with forecasts, Goolsbee emphasized that the services sector's inflation is especially troubling given its detachment from oil or tariff effects. He expressed nervousness over the inability of this sector's prices to stabilize or decline, underscoring an ongoing challenge for the US Federal Reserve.

EU lawmakers are considering expanding the supervisory remit of the European Securities and Markets Authority, a move that could more than double its headcount and significantly broaden its oversight of trading venues, clearing houses and other market infrastructure. Industry participants and officials warn that the plan could strain hiring capacity and regulatory expertise, with proposals ranging from recruiting staff from national authorities to secondments to manage the transition and preserve supervisory continuity.

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