Fed official signals support for three rate cuts in 2025

Good morning. Here's what happened overnight and what you need to know today.

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1.

Dovish Fed: Federal Reserve vice chair for supervision Michelle Bowman said Saturday (Sunday AEST) that this month’s weaker-than-expected US job market report strengthens her belief that three interest rate cuts will likely be appropriate this year. Most Fed officials had been cautious about cuts due to tariff-related inflation risks, but several are now signalling openness to easing as labour market concerns grow. Bowman was one of two Fed governors who dissented in July against leaving short-term borrowing costs in the 4.25%-4.50% range, citing concerns about labour market fragility. She pointed to the unemployment rate rising to 4.2% and revisions showing job gains over the past three months averaging 35,000. Ahead of inflation numbers due Tuesday, Bowman said: “As I gain even greater confidence that tariffs will not present a persistent shock to inflation, I see that upside risks to price stability have diminished.” The Fed has three policy meetings remaining in 2025. (Fed)(Reuters)(AP)

2.

Br(AI)n Trust: A 23-year-old former OpenAI researcher with no professional investing experience has quickly raised more than USD1.5 billion ($2.3 billion) for an AI-focused hedge fund he describes as a “brain trust on AI” and gained 47% in the first half of 2025. The Wall Street Journal reports Leopold Aschenbrenner, a native of Germany who briefly worked as a researcher at OpenAI before being pushed out, later founded Situational Awareness. He took the firm’s name from his 165-page essay on the promise and risks of artificial superintelligence. The San Francisco-based fund invests in global stocks expected to benefit from AI development and a small number of startups. Investors include Stripe founders Patrick and John Collison, Daniel Gross and Nat Friedman, who were recently recruited by Mark Zuckerberg to help run Meta’s AI efforts. Billions are also pouring into other new AI hedge funds, with many sharing top holdings, including AI startups such as Anthropic, power companies supplying data centres such as Vistra, and companies in the semiconductor and infrastructure sectors. It comes as fund managers join the war for AI talent. (WSJ)(Capital Brief)

3.

Chip wars: China’s state media said that Nvidia’s H20 chips pose security problems for the country and suggested that the country has the option “not to buy" the chips, Reuters reports. An article posted on WeChat by an account affiliated with the Chinese state broadcaster, CCTV, said that H20 chips are not technologically advanced or environmentally friendly. Nvidia developed H20 chips for the Chinese market after the Biden administration imposed export bans on advanced AI chips in 2023, before current US President Donald Trump banned their sales earlier this year as the trade war began heating up. Trump reversed the ban in July. Meanwhile, the FT reports that China wants the US to ease export controls on AI chip components as part of a trade deal. Sources cited by the FT say that Beijing wants the Trump administration to relax export restrictions on high-bandwidth memory chips. (Reuters)(FT)(Capital Brief)

4.

Cable commitment: Foxtel will hang on to a string of major US sports in Australia, including the NBA and NFL, after the DAZN-controlled pay TV operator struck a fresh carriage agreement with Disney for its sports channel ESPN. The deal, which is set to be announced on Monday, was one of the highest-profile sports deals coming up for expiry at Foxtel following News Corp's sale of the pay TV operator earlier this year, and locks in access to the bulk of its US sports offering. The agreement will see Foxtel and Kayo Sports continue to carry ESPN’s broadcasts of major US sports including the NBA, NFL, Major League Baseball and NHL. ESPN also has the UFC, FIBA Asian Cup and FIBA World Cup, among other sports. The deal was struck on a “multi-year” basis, Foxtel said in a statement. (Capital Brief)

5.

Israel-Hamas war: Israeli Prime Minister Benjamin Netanyahu defended his much-criticised plan to carry out a final sweep against Hamas in Gaza, arguing that Israel has "no choice" but to "finish the job" and "defeat" the militant group to free hostages. On Sunday, Netanyahu said the new operation could begin "fairly quickly" after his security cabinet approved the plan to take control of Gaza City. At the UN Security Council, European countries warned that expanding military action would endanger civilians and hostages, urging urgent aid to Gaza to prevent further suffering. Denmark, France, Greece, Slovenia and the UK called the crisis “manmade” and demanded action to halt starvation. A separate joint statement by Australia, the UK and seven allies also strongly rejected Israel’s plans, while Germany curbed arms exports to Israel driven by a growing public outcry. Meanwhile, demonstrations against the operation drew more than 100,000 protesters in Tel Aviv, while almost 500 people were arrested at a Palestine Action rally in London. (BBC)(Politico)(Bloomberg)(Capital Brief)(Reuters)

6.

Russia-Ukraine war: NATO Secretary General Mark Rutte said this week’s Trump-Putin summit could open the door to talks on Ukrainian territory, even as President Volodymyr Zelenskiy rejects ceding land occupied by Russia. Trump will meet Putin in Alaska on Friday to discuss the war. Rutte suggested Ukraine could acknowledge losing control of some areas without giving up sovereignty. Russia has demanded Ukraine cede Crimea and the eastern Donbas. Trump said the deal under discussion would involve “some swapping of territories to the betterment of both”. Zelensky said that Kyiv will not cede territory to Russia as part of any peace agreement. Meanwhile, Ukrainian drones struck the Saratov oil refinery in southern Russia on Saturday night. The Russian defence ministry said 121 drones were destroyed, including eight over Saratov. Ukrainian media reported the refinery was on fire after the attack. (Bloomberg) (Bloomberg)(Reuters)(Capital Brief)

7.

Culture shift: Westpac CEO Anthony Miller is driving a broad cultural overhaul, demanding shorter meetings, weekend work, and telling staff he works on Christmas Day, reversing the cautious approach at major lenders since the banking Royal Commission, according to The Australian Financial Review. Since taking the top job in December, he has overseen one of the largest cost-cutting rounds in banking history, with 790 roles cut in two months, mainly in corporate and customer services, technology and the institutional bank, the paper said, with more losses expected in branding and marketing. He is continuing the Unite project to streamline systems across Westpac and its subsidiaries, sharing his monthly schedule with managers, and holding quarterly “all-in” staff meetings. However, the bank’s in-office policy has reportedly eased because of a desk shortages in Sydney. Meanwhile, at ANZ, new CEO Nuno Matos has launched a strategic review, citing underperformance and calling for greater clarity, decisiveness, accountability and pace. Both banks have lagged Commonwealth Bank and NAB in market share. (AFR)

8.

Washington beautification: Donald Trump has demanded that homeless people “immediately” move out of Washington, DC, to make the nation’s capital “more beautiful,” pledging to relocate them “far from the Capital” and jail criminals. In Truth Social posts, Trump said the action would happen “very fast” with “no ‘Mr Nice Guy,’” comparing it to his border measures. The US president will announce his plan at a White House press conference at 10am Monday local time (Tuesday AEST), after nearly 450 federal officers were deployed following an attempted carjacking involving a former administration staffer. DC Mayor Muriel Bowser said the city is “not experiencing a crime spike,” citing a 26% drop in violent crime in the first seven months of 2025 compared with 2024, and a two-year fall to a 30-year low. She opposes deploying the National Guard and called comparisons of Washington to a war-torn country “hyperbolic and false.” (CNBC)(NPR)(WaPo)