Mulling through the word soup that is dished up on a daily basis from the White House is a tiresome pursuit for investors, and stock markets, as strong as they may be, are starting to hunker down to await what will be a long month until such times as new tariffs are made clear come August 1st, if indeed the start of next month turns out to be a thing. The latest targets of the current ‘pick-and-mix’ bag of trade delights are copper and pharmaceuticals. How a 50% tariff on the most important metal in this technological age can ever be made good is the stuff of President Trump’s fancy rather than the reality of its use in almost everything electrical that can be thought of. Likewise, the echo of emptiness in the threats is seen as details on pharmaceutical tariffs “will come at the end of the month,” Commerce Secretary Howard Lutnick told CNBC after a Cabinet meeting and Trump saying he would give about a year or six months grace before implementation. All serve to foster disquiet and all markets’ cravings for consistency continues.

The state of play within current oil prices is much clearer at present and does not feel obliged to dance to the tune of a Washington whim. As M1 European Gasoil futures approach expiry tomorrow, its backwardation of $60/tonne to M2 keenly expresses the anxiety felt with the low stock situation in global distillates and while such a value is heightened due to the emotion of positioning, awareness of a shortfall in the middle part of the barrel will be felt until refiners once again turn their attention to it in the autumn. Partnered then with firmer medium-heavy crude grades, the geopolitical tension once again rising from Houthi attacks in the Red Sea and a draw in Gasoline in API data of 2.2mb reflecting heightened American holiday driving, the idea of ample future supply must give way to short-term considerations. Contributing as a tailwind is the EIAs revision lower of US Crude production in 2025/2026 due to lower prices.

The case for central bank care

With an 88% chance of the headline rate being cut by 25-basis points, the decision by the Reserve Bank of Australia to leave rates unchanged has set teeth all of a chatter in why there seems commonality among the central banks of the world to adopt a seemingly more conservative approach to economic stimulation. The RBA Governor, Michele Bullock, explained away the reasoning as mainly being how the bank wanted to make sure inflation had been “nailed” and that the next move will depend on quarterly inflation data to be released later this month. One wonders if the US Federal Reserve had emailed their stump speech to the RBA, because the wait-and-see approach is becoming endemic within the global community’s guardians of financial stability.

“Two Out of Three Ain’t Bad,” might have been good enough for the rocker Meatloaf in 1977, but it does not hold up to the criteria central bankers are looking for in a clean sweep of the drivers that might impel them to loosen fiscal control. The Australian Bureau of Statistics (ABS) reported last month on how in the first quarter of 2025 growth only matched that of the same period in 2024 at 1.3%, being disappointingly lower than the 1.5% expectation. Indeed, on a quarter-on-quarter basis, the economy expanded 0.2%, undershooting expectations of 0.4% growth. Adding to lack of growth, an obvious agitator to stimulative action, was how inflation has eased. ABS data showed CPI accelerated by only 2.1% in May, 0.3% below that of April and below the 2.3% expected rise. Any immediate danger of fanning inflation by cutting interest rates is much reduced then, but the stopper in the bottle of financial feed is resolute employment. The ABS report of June 19, 2025, noted unemployment remaining at 4.1% the same as the previous two-month period, monthly hours increased and the employment to population ratio remained a healthy 64.3%. Employment is becoming much more a consideration in interest rate cuts because giving cheaper money to a thriving employment force must encourage inflation.

As suggested above, the current lack of adventure by the RBA finds pluralism as indeed many central banks seek a ‘Goldilocks’ scenario in which they might feel comfortable in bringing rate relief to backfooted economies and on a domestic level, mixed performances in global housing prices. We can be in no doubt the world’s economic cues are taken from the US on a daily basis, therefore that which moulds the thinking in Australia is an import from the biggest trading nation in the world. It matches in how the US saw a decrease in annualised GDP growth of 0.5%, how inflation remains contained and although there was divergence between lower ADP Employment and higher Non-Farm payrolls, employment is still stubbornly good. The unemployment rate fell to 4.1% in June from 4.2% in May, thwarting expectations of rise to 4.3%.

Can it be that rolling out strong employment as an easy scapegoat for a laggardly interest rate hand is convenient? The answer is probably yes. Buying time is a much-needed luxury when making rate cut decisions. The impact and impropriety of going early and then having to contemplate a reversal, or at the very least a cessation of all hope in future cuts, is much less palatable than bearing the insults from Donald Trump in the case of Jerome Powell, and for Michele Bullock, criticism from a roundhouse of press and an Australian population worried on slowing house prices and domestic debt. Yet, the root of all criticism is the root of all inertia from the likes of Powell and Bullock. While the US President continues to shape-shift in what tariffs will eventually look like, take the threatened 25% tariffs on Japan and South Korea that only have a lifetime until the 1st of August, monetary policy makers have little option other than keeping a restful foot on the middle peddle. Economists from the North Pole to Timbuktu warn on the inflationary nature of tariffs, therefore, to cut interest rates is pre-emptive and a gamble. Tariff-induced price rises are happening just by the mere bandying of them, if a state of global trade war eventually breaks out financial doves will soon turn into hawks when rapid inflation bites into the value of their assets. The central bankers are the grown ups in this madhouse and their prevarication should be welcomed.

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