The UK budget settled markets, if only because it was not as bad as it could have been, cutting welfare spending and increasing defence spending. The deficit spending remains enormous, but in line with expectations, so the bond market gave the budget a C-. UK growth forecasts were revised lower, from 2% to 1%, but these still remain ambitious considering the state of the British economy. Tariff threats were eased, when Trump tempered fears, saying they may be more ‘lenient’ than expected. Auto tariff announcements may come in hours rather than days. The USD continues to gain momentum, with the EUR falling to 1.0750, while the GBP slumped below 1.2900.The resurgent reserve pushed the AUD back below 0.6300, while the NZD slipped to 0.5720. The latest inflation reading from Australia was slightly better than expected, falling from 2.5% to 2.4%, green-lighting further rate cuts from the RBA.
