Good morning. Here's what happened overnight and what you need to know today.
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Bossy Bessent: US President Donald Trump said he may name the next Federal Reserve chair “a little bit early” and is down to three or four potential candidates to replace Jerome Powell, whose term ends in May. Speaking at the Kennedy Center in Washington, Trump also said rates “should be three or four points lower” and called Powell “truly incompetent”. Treasury Secretary Scott Bessent echoed that in a Bloomberg interview, arguing that officials would have cut rates instead of holding them last month if they had been aware of revised labour market data released two days after their last meeting. He said the Fed should start a cycle of rate cuts with a 50 basis point cut in September, adding that “any model” suggests “we should probably be 150, 175 basis points lower”. The comments come as investors cement bets that the Fed will cut rates from September, after unexpectedly muted US inflation data, pushing global stocks higher. (Bloomberg)(Capital Brief)(Reuters)(Bloomberg)(WSJ)(FT)
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Trade take: Bessent also said the deal allowing Nvidia and AMD to resume lower-end AI chip sales to China in return for giving the US government 15% of related revenue, could be a model for other industries. Crediting Trump with what he called a “very unique solution” Bessent said proceeds will go toward paying down debt, with a substantial repayment potentially leading to discussions on sending money to taxpayers. “I think we could see it in other industries over time,” Bessent said in the Bloomberg interview. “Right now, this is unique, but now that we have the model and the beta test, why not expand it?” Bessent said he will meet his Chinese counterparts within two to three months and dismissed the possibility that China could get tariff relief in exchange for investments. He also urged European nations to be prepared to join the US in imposing higher tariffs on China and other countries that buy Russian energy, lamenting a cool response when he raised the idea at a Group of Seven meeting earlier this year. (Bloomberg)
