Economy

Updates on the state of the economy, growth, inflation, and employment.

Economy
Record A$100bn forecast for Australian agriculture
The value of Australian agriculture, fisheries and forestry production is set to reach a record A$101.6 billion in the 2025-26 financial year. This comes despite farmers enduring horror drought conditions and volatile international trade markets, with the Australian Bureau of Agricultural and Resource Economics (ABARES) predicting an A$7.3 billion rise from the previous year. There are also still other concerns in the industry, including the crop production value falling over the next 12 months due to rainfall in July in South Australia and Victoria, as well as concerns for southern NSW because of a slow start to the winter cropping season. According to ABARES executive Jaren Greenville, the record value was mostly boosted by livestock. “We’ve seen high prices lately for both livestock and animal products, like beef, lamb and milk,” Greenville said. “This has boosted the value of livestock production to $41.6 billion, helping to drive overall agriculture sector production value to a forecasted $94.7 billion, which would also be a record.” Australia’s gross agricultural production is forecast to rise by A$685 million in the financial year, with livestock and livestock production values tipped to grow by $1.1 billi
Economy
US Treasury yields rally on prospect of tariff payback
United States Treasury yields jumped in overnight trading following revelations that the Trump Administration may - in the wake of a court decision knocking down most of the tariffs - have to repay monies already collected. Having been initially worried about Trump’s tariffs driving yields higher, the market view changed over the U.S. summer, with bond investors heartened by the extra revenue being raised. However, that confidence is starting to unravel on the prospect of tariff money having to be paid back, especially given the highly delicate state of America’s fiscal situation. “If this ruling is upheld, refunds of existing tariffs are on the table which could cause a surge in Treasury issuance and yields,” wrote Ed Mills of Raymond James in a client note. According to Ed Yardeni, investment strategist at Yardeni Research, bond vigilantes might start acting up again if they can no longer look forward to a significant reduction in the federal deficit attributable to tariff revenues. At their highs of the session, the 30-year yield topped 4.97%, its highest since late July, while the 10-year hit a high of 4.279%, its highest since Aug. 27. Meanwhile, the 2-year Treasury yield moved 3 basis points higher to 3.65
Economy
Reporting season turmoil masks early signs of recovery
Given the market’s hypersensitive response to many of the stocks that posted pretty ordinary results during August’s reporting season, investors could be forgiven for asking: What exactly were you smoking? When it comes to the big end of town – aka the ASX 300 stocks – it’s institutional investors who move the market, and last reporting season they moved it plenty – both up and down – with some stock’s results receiving all the pathos of a Greek tragedy. One of the biggest overhangs from last reporting season was the wildly gyrating share price volatility stock’s received in response to their results, with the market appearing to over-react to stocks failing to beat consensus forecasts, mixed outlooks or lower FY26 guidance.Toppy valuations - poor resultsOverall, it was stocks with toppy valuations and poor results that received the bulk of the market’s wrath. Following a mixed result – including choppy earnings, plans to cut 3,000 jobs, and spin off its Seqirus operation – CSL (ASX: CSL) experienced its single biggest one-day share price drop on 19 August, which saw $22 billion wiped off its value. Since 18 August CSL’s share price has fallen in a virtual straight line from $271.99 to $207.90 today. But the annual re
Economy
Trump Fed control a 'serious danger', says Lagarde
European Central Bank President Christine Lagarde has warned that President Donald Trump's attempts to undermine Federal Reserve independence would pose a "very serious danger" to the global economy. Speaking to France's Radio Classique on Monday, Lagarde said White House control over U.S. monetary policy would have "very worrying" consequences for economic stability worldwide. "If U.S. monetary policy were no longer independent and instead dependent on the dictates of this or that person, then I believe that the effect on the balance of the American economy could, as a result of the effects this would have around the world, be very worrying, because it is the largest economy in the world," Lagarde said. Last month, Trump attempted to fire Fed Governor Lisa Cook over mortgage fraud allegations. Cook has since filed a federal lawsuit challenging the removal, arguing that Trump lacks legal authority and that the accusations are unsubstantiated. The Fed maintains its current target range of 4.25% to 4.5% due to inflation concerns, particularly around tariff impacts, yet Trump has repeatedly insisted the interest rate cuts to below 1%. Lagarde said it would be "difficult" for Trump to gain control of the Fed's majori
Economy
Germany mulls shifting funds to bolster defence industry
In an attempt to ramp up defence industry production amid the growing threat posed by Russia since its 2022 invasion of Ukraine, Germany's economy minister, Katherina Reiche, is considering reallocating state financing from an existing fund earmarked to facilitate economic transformation. She told delegates at a "Handelsblatt" conference on the defence sector on Monday that reallocating funds for defence could be a consideration. Germany’s military aid contribution, the second largest after the United States, is considered essential to Ukraine's continued efforts to defend against Russian aggression and pursue a just and lasting peace. While Reiche did not specify which fund, it’s understood she was referring to unspecified resources at the ministry's disposal and not the Climate and Transformation Fund. "Rearmament is a security policy imperative, but it is also an economic and technological opportunity for Germany,” said Reiche. Having concluded that "old certainties have disappeared" since Russia's full-scale invasion of Ukraine, and that Moscow appears disinterested in a ceasefire, Reiche believes it is right to make state financing available now to give the industry planning security. Reiche’s talk of findin

Economy
Russia's economy squeezed as war funds evaporate
While talk of Russia’s deteriorating economy is not new, what’s becoming increasingly evident is that the war-driven boost, courtesy of heavy budget spending on its military, is now well behind the ailing former soviet economy. While the Russian President Vladimir Putin acts like he doesn’t care, it’s becoming glaringly evident that the country’s economic resources needed to sustain its war effort at current levels are fading fast. Surplus funds that have been used to boost the Russian economy are drying up. So much so that economists now suggest Russia’s appetite for a peace deal with Ukraine has more to do with some brutal economic realities than any philosophical resolve to end the bloodshed. According to Russia’s Finance Ministry, the budget deficit reached 4.88 trillion roubles (US$61.1 billion) between January and July this year, equating to 2.2% of GDP. During the same timeframe, government spending surged by 20.8% to 25.19 trillion roubles (US$317.8 billion). While the Russian economy has been teetering on the brink of recession for months, financial authorities are now fully aware that taking actions to slow growth in a bid to avoid runaway inflation is a delicate dance.Nothing to see hereDespite Russia’s
Economy
UK bank shares drop after calls for new tax on profits
United Kingdom bank shares plummeted during Friday trading, after calls for a new tax on banking profits. NatWest, Lloyds, Barclays, and HSBC all saw shares fall. The Institute for Public Policy Research (IPPR) think tank has argued that the UK’s government should add a new tax on commercial banks to stem the Bank of England’s losses of UK£22 billion (A$45.34 billion) a year from quantitative easing. “The Bank of England and Treasury bungled the implementation of quantitative easing. What started as a programme to boost the economy is now a massive drain on taxpayer money,” said IPPR associate director for economic policy Carsten Jung. “Public money is flowing straight into commercial banks’ coffers because of a flawed policy design,” said Jung. “A targeted levy, inspired by Margaret Thatcher’s own approach in the 1980s, would recoup some these windfalls and put the money to far better use – helping people and the economy, not just bank balance sheets.” This tax on banks’ quantitative easing reserves could raise UK£7-8 billion each year, according to the IPPR. The IPPR has also called for the Bank of England to end its sale of bonds bought from U.K. commercial banks, which could save over £12 billion each year. NatW
Economy
Court rules most of Trump's tariffs as illegal
The United States Court of Appeals has ruled that most of President Donald Trump’s tariffs were illegal, undercutting the president’s use of the levies as a key international economic tool. A 7-4 decision by a panel of judges in Washington made the ruling but allowed tariffs to remain in place until 14 October to give the Trump administration a chance to file an appeal with the U.S. Supreme Court. Trump said that a record US$15 trillion has been invested in the U.S., with much of this coming from tariffs. “If a Radical Left Court is allowed to terminate these Tariffs, almost all of this investment, and much more, will be immediately cancelled!” he said. Following the ruling, Trump also said it would be a “disaster for the country” if the tariffs were removed. “It would make us financially weak, and we have to be strong,” he said. “The U.S.A. will no longer tolerate enormous Trade Deficits and unfair Tariffs and Non Tariff Trade Barriers imposed by other Countries, friend or foe, that undermine our Manufacturers, Farmers, and everyone else. “If allowed to stand, this Decision would literally destroy the United States of America.” The case was filed by Democratic-led states and a group of small businesses and
Economy
Fed’s Waller backs September cut, sees easing ahead
Federal Reserve Governor Christopher Waller on Thursday strengthened his call for interest rate cuts, signalling that the United States central bank should begin easing next month and continue through early 2026 to shield the economy from a weakening labour market. “Based on what I know today, I would support a 25 basis point cut at the Committee's meeting on September 16 and 17,” Waller told the Economic Club of Miami. "While there are signs of a weakening labor market, I worry that conditions could deteriorate further and quite rapidly, and I think it is important that the FOMC not wait until such a deterioration is under way and risk falling behind the curve in setting appropriate monetary policy." By his estimates, a neutral policy rate would sit near 3%, well below the current 4.25%-4.50% range. "The time has come to ease monetary policy and move it to a more neutral stance", Waller said, adding he anticipates "additional cuts over the next three to six months, and the pace of rate cuts will be driven by the incoming data". He stressed that while September’s cut should be limited to 25 basis points, that outlook could shift depending on the Labour Department’s August jobs report due next week. Inflation, he