Latest news with #MacquarieGroup
Yahoo
3 days ago
- Business
- Yahoo
War, tariffs, and Trump: What members of the FOMC will be thinking as they finalize their base rate decision today
ANALYSIS: The Federal Reserve is widely expected to keep interest rates steady at 4.25% to 4.5% amid heightened uncertainty from Middle East tensions, volatile oil prices, tariff disputes, and a recent U.S. debt downgrade by Moody's, all of which complicate the economic outlook and policy decisions. Despite political pressure from President Trump to cut rates, analysts anticipate the Fed will maintain its cautious, data-driven approach, holding off on cuts until there is clearer evidence of economic weakness or easing inflation. If members of the Federal Open Market Committee (FOMC) were hoping to meet with some greater clarity this month, they will be sorely disappointed. Instead of a clearer path laid out ahead, Jerome Powell and his peers sat down to news of increased geopolitical conflict in the Middle East—potentially pushing up oil prices—as well as ongoing uncertainty over tariff agreements with key partners, and a downgrade of U.S. credit by Moody's. Of course, the elephant in the room will be President Donald Trump's reaction if the FOMC once again refuses to heed his wishes in cutting the base rate. The melting pot of issues leads most analysts to suspect the base rate will once again be held steady at 4.25 to 4.5%—a relatively tight stance according to dovish economists who argue the economy is coping relatively well according to data. As David Doyle, head of economics at Macquarie Group, wrote in a note shared with Fortune this week, the Fed is walking a 'tightrope.' 'The FOMC is likely to hold rates steady again this week,' Doyle continued. 'The market reaction is likely to be driven by the communication and the potential guidance of further cuts. The dot plot may push out the suggested timing of rate cuts. We suspect this may tilt somewhat and suggest 25 bps [basis points] of cuts in 2025 and 75 bps in 2026 (from 50 bps in each year in March).' Doyle added that Chair Powell 'may describe recent inflation developments as encouraging, but also downplay their relevance given uncertainty ahead due to tariffs, fiscal policy, and the recent spike in the oil price due to geopolitical developments.' The overall expectation from Wall Street is that there will be no change in the base rate, but here are some of the headline factors which may be influencing Chair Powell's final decision to be announced later today. Tensions in the Middle East are escalating by the day after Israel and Iran launched attacks on each other, with both sides targeting senior military officials. Despite saying the U.S. wouldn't wade into the conflict, President Trump posted on his social media site, Truth Social, yesterday that 'we now have complete and total control of the skies over Iran,' and suggested Iran's leader, Ayatollah Ali Khamenei, is an easy target despite being in hiding. Khamenei wouldn't be 'taken out … for now,' Trump added. The escalating tensions in the Middle East pose a question over oil supply, with Iran threatening to close the Strait of Hormuz. The oil flow through the strait accounts for about 20% of global petroleum liquids consumption, writes the U.S. Energy Information Administration. Vikas Dwivedi, global energy strategist at Macquarie, wrote in a note seen by Fortune: 'We expect oil prices to remain volatile with an upward trend for the next few weeks as both Iran and Israel maintain their military intensity. Regardless of military or diplomatic progress, we expect Brent to rally towards the low $80 level before hitting a plateau as the perceived risk of actual oil supply disruption becomes largely discounted. 'From the low $80 plateau, the next price move will, in our view, be driven by what happens to Iranian oil export infrastructure. If it is damaged or destroyed, we believe oil will trend towards $100 due to the direct loss of Iranian exports and the risk premium associated with Iran's response, including the blockage of the Strait of Hormuz. 'There will likely be selloffs on hopes for diplomatic solutions, profit-taking, and new shorts, but we expect those to be bought until the market ascertains the risk to oil supply.' None of this makes Powell's life any easier, as oil is a key factor determining the rate of inflation in the U.S. Policy out of the White House is also adding further uncertainty to the already blurry picture. Trump's 'Big, Beautiful Bill' has raised eyebrows about the amount it could contribute to U.S. national debt, despite some deficits being offset by inflationary but moneymaking tariff policies. The lack of action from the Oval Office isn't impressing Moody's, which downgraded U.S. debt a month ago to Aa1 from Aaa. That's an issue for Powell, with the move pushing Treasury yields up, creating higher borrowing costs for the government that potentially have trickle-down inflationary impacts on consumers. But as Deutsche Bank's Jim Reid wrote in a note shared with Fortune this morning: 'Ahead of the Fed's decision, U.S. Treasuries rallied yesterday, on flight to quality, and as the weak data cemented the view that rate cuts were still likely in the months ahead. 'That meant yields fell across the curve, with the two-year yield (–1.5 bps) down to 3.95%, whilst the 10-year yield (–5.7 bps) fell to 4.39%. The outperformance of long-end bonds came after news that the Fed will be holding a meeting on June 25 to discuss changes to the supplementary leverage ratio, which may allow banks to hold more Treasuries.' Another question is, of course, tariffs, with Powell already signaling he is waiting to see if businesses pass on increased costs to consumers. Thierry Wizman, global FX and rates strategist at Macquarie, pointed out that level inflation data after the 'Liberation Day' tariff announcements wasn't a signal to bank on, writing the 'low May CPI [consumer price index] print isn't because tariffs don't matter for measured inflation. Tariffs do matter, or will matter. 'Rather, inflation retreated because underlying notional demand has weakened … We still lean toward the view that Jay Powell will sound more 'dovish' next week than he did in May. We believe that were it not for the uncertainty caused by the tariffs, the combined information coming from the inflation and labor-market data would have compelled the Fed to have resumed cutting its policy rate by now.' Powell also has to weather the storm that may come in the form of President Trump, who has made it clear that he wants the Fed to cut rates. While Trump has stepped back from threats that made the market worry that the Fed's independence might be under threat, he has made no secret of the fact he wants 'too-late Powell' to cut the base rate. Powell, on the other hand, has maintained that politics have absolutely no impact on the Fed's decision-making. Despite threats from Trump that he may threaten Powell over the lack of action, Richard Clarida, the former Federal Reserve vice chair from 2018 to 2022, said the White House will stop short of materially altering the central bank's independence. 'We may be going to a world where the Fed loses some power in the regulatory sense,' Clarida told MarketWatch in an interview published yesterday. 'But it looks like the Fed retains independence to raise or lower interest rates.' On the chairman to follow Powell, Clarida added, Trump's nomination will not be the only factor: 'I think markets can have a say,' he explained, highlighting stocks and bonds would be in for a shaky ride if the candidate for Fed chairman wasn't viewed as truly independent or committed to bringing inflation down. This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
AU Financial Review
4 days ago
- Business
- AU Financial Review
Macquarie Asset Management buys back into UK airports
Macquarie Group's infrastructure arm has acquired stakes in three United Kingdom airports from Canadian pension investor Ontario Teachers' Pension Plan, as it seeks to capitalise on a rebound in post-pandemic travel demand. The European infrastructure fund of Macquarie Asset Management (MAM) has bought a 55 per cent stake in Bristol Airport, 26.5 per cent of Birmingham Airport and a quarter stake in London City Airport. It comes a year after Macquarie pulled out of a bidding battle for a stake in London's Heathrow Airport, the busiest in Europe.
Wall Street Journal
4 days ago
- Business
- Wall Street Journal
Macquarie Collects $8 Billion for Infrastructure Investments in the Americas
Macquarie Asset Management, one of the world's largest private infrastructure investors by assets under management, has closed its latest fund dedicated to investing in infrastructure projects and companies in the Americas. The investment arm of Australian financial services provider Macquarie Group collected a little over $6.8 billion for Macquarie Infrastructure Partners VI, the firm said, slightly less than a $6.9 billion predecessor pool that closed in 2021.
ABC News
4 days ago
- Business
- ABC News
Queensland minister calls on federal government to crackdown on illegal tobacco trade
Queensland's health minister has called on the federal government to tighten laws after revelations about how largely unregulated private ATMs are helping fuel illegal tobacco sales. An ABC investigation on Wednesday detailed how private ATMs — including those from a company whose major backer is prestigious investment bank Macquarie Group — were being installed in stores selling black-market tobacco. Private ATM companies have even signed deals with people charged and later convicted with tobacco offences. Some stores were prompting customers by either only accepting hard currency or offering hefty discounts for tobacco bought with cash. AUSTRAC, the nation's money laundering watchdog, told the ABC that private ATMs were a "target for criminals" and were not regulated under anti-money laundering laws, meaning a "reduced visibility for AUSTRAC and law enforcement". Those laws are a federal responsibility, but Home Affairs Minister Tony Burke's office said it did not have "anything to add at this stage". The shadow federal attorney-general, Julian Leeser, acknowledged AUSTRAC had flagged private ATMs as a risk for cash-intensive businesses in a 2024 money-laundering report. He said any regulatory changes to anti-money laundering laws that impacted private ATMs would "need to be the subject of rigorous cost-benefit analysis and careful consultation with industry". In Queensland, the health department has a role in disrupting the illicit tobacco trade, including temporarily shutting down stores in breach of tobacco laws. "The Commonwealth government should be pulling every appropriate lever to stop this criminal trade and prevent these illicit products from getting into the country in the first place," Health Minister Tim Nicholls told the ABC. "Reports of the lengths that these black-market operators are going to in laundering their money is disturbing. It highlights the need for swift regulatory and enforcement action to close loopholes and deprive these operators of their cash and ability to generate profits." The illicit tobacco trade has boomed as increasing taxes and duties have been laid on cigarettes federally. The current excise or customs duty on a 20-cigarette packet is $28.06, and GST comes on top of that. But cigarettes, without required health warnings, are being sold openly in some Queensland stores for $8 a packet. Mr Nicholls said Queensland had taken steps to increase pressure on the trade, including by introducing the nation's "harshest" fines and consulting on laws. That includes floating the possibility of legislation targeting landlords who knowingly lease premises to illicit tobacco sellers, with the potential penalty being a year in jail or $161,300 fine, or both. "Queensland is effectively at the 'end of the conveyor belt' of this problem, taking enforcement action against illicit goods smuggled into the country." The state's Crime and Corruption Commission has also launched proceeds of crime action potentially targeting more than $6 million in assets in one case against an accused illicit tobacco seller. The private ATM company backed by Macquarie Group is called Next Payments. It said it fully cooperates with authorities to proactively flag suspicious behaviour and rejects any suggestion its machines could fuel money laundering.
Reuters
4 days ago
- Business
- Reuters
Australia's Macquarie picks up stakes in UK airports
June 18 (Reuters) - Australia's Macquarie Group ( opens new tab said on Wednesday that its asset management arm has acquired stakes in Bristol, Birmingham and London City airports from Ontario Teachers' Pension Plan for an undisclosed amount. The investment bank is buying a 55% stake in Bristol airport, 26.5% stake in Birmingham airport and a 25% interest in the London City airport.
