Trump strikes Yemen's Houthis, Iran warned

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

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1.

Trump’s offensive: The US launched large-scale military strikes against Yemen’s Iran-aligned Houthis, killing at least 31 people at the start of a campaign expected to last weeks. In a social media post, President Donald Trump said the Saturday (Sunday AEDT) strikes were in response to Houthi attacks on Red Sea shipping and warned Iran to halt its support for the group. The airborne attacks targeted Houthi leaders’ homes, as well as radars, air defences and missile and drone systems. It is the US’ largest military operation in the Middle East since Trump took office in January. The Houthi-run health ministry reported 31 killed and 191 injured, mostly women and children. The Houthis had largely halted attacks after a Gaza ceasefire in January but vowed to resume targeting Israeli ships following Israel’s blockade on Gaza aid this month. Houthi officials condemned the strikes as a “war crime” and vowed to retaliate. Iran denied directing the Houthis but warned of a “decisive and destructive” response if attacked. Trump said Houthi assaults “will not be tolerated” and threatened “overwhelming lethal force.” (Capital Brief)(Donald Trump's social media post)(NYT)(Reuters)(WSJ)

2.

China’s plan: China’s State Council has announced a “special action plan” to boost domestic consumption amid deflationary pressures and weak consumer demand. The plan includes wage increases, a childcare subsidy system and measures to stabilise the stock and real estate markets. Other initiatives involve higher pensions, expanded student financial aid, tourism support and eased consumption restrictions. Issued to all regions and departments, the plan aims to “vigorously boost consumption, expand domestic demand in all directions, improve consumption capacity by increasing income and reducing burdens,” according to a Council report. However, it lacks new central government funding, leaving implementation to debt-laden local governments. A news conference with officials from the finance ministry, central bank, and other agencies is set for Monday. Chinese stocks rallied on Friday after the Council scheduled the press conference for 3:00 pm local time (6:00 pm AEDT). (Capital Brief)(Xinhua via China’s State Council)(Reuters)(Bloomberg)

3.

Bessent guarantee: US Treasury Secretary Scott Bessent said there “are no guarantees” the US will not face a recession from President Donald Trump’s economic policies, but ruled out the possibility of a financial crisis. "We are going to have a transition, and we are not going to have a crisis," he told NBC’s Meet the Press. He said the administration is “putting in robust policies that will be durable” and that market corrections are “healthy” and “normal.” The S&P 500 entered a correction last week as investors reacted to economic uncertainty. Bessent said he could guarantee the US would have had a financial crisis if it had "kept up at these (unsustainable) spending levels.” He said long-term market performance would depend on good tax policy, deregulation and energy security. He added, reciprocal tariffs from 2 April will be in place until global barriers for the US came down and it could export more, “or if they don’t do it, we take in substantial revenues.” (NBC News)

4.

Australia’s willing: Anthony Albanese signalled Australia’s willingness to join a Ukraine peacekeeping effort, as world leaders ramp up pressure on Russia to accept a ceasefire. The prime minister joined a virtual summit of about 25 leaders Saturday night, hosted by UK Prime Minister Keir Starmer, where Starmer pushed for a "coalition of the willing" to back Ukraine. Britain and France are open to sending peacekeepers if a truce is reached, while Albanese said Australia would consider a small contribution but only after a ceasefire. Opposition Deputy Leader Sussan Ley argued Europe was better placed for peacekeeping, and Greens leader Adam Bandt said any Australian role would depend on the details of an agreement. Defence expert and former home affairs secretary Mike Pezzullo warned a Ukraine mission would not be traditional peacekeeping but a "war-fighting" force. Military leaders will meet in London this week to discuss plans. (AFR)(The Australian)(ABC)

5.

Budget blues: Deloitte Access Economics is forecasting a $26.1 billion deficit in the upcoming federal budget and warns of a worsening fiscal position over the next four years, with net debt expected to rise to 23.9% of GDP. It says neither side of politics has a “credible plan” to manage the growing fiscal holes in the medium-term budget outlook. Treasurer Jim Chalmers will deliver a budget preview at the Queensland Media Club (Tuesday), outlining the estimated $1.2 billion economic impact of Cyclone Alfred. The government has received a record 859 pre-budget submissions. Capital Brief’s deep dive into those shows concerns over lagging productivity and the cost-of-living crisis remain front and centre. More than 540 submissions referenced “productivity”, over a quarter addressed cost-of-living issues, 33 called for tax reform and 63 mentioned the “energy transition”. Just 11 submissions referenced Donald Trump. (Capital Brief)

6.

AI arms race: Elon Musk and OpenAI have agreed to fast-track their trial over OpenAI’s for-profit shift, according to a US federal court filing. A judge had earlier denied Musk’s request to pause OpenAI’s transition but approved an expedited trial in the autumn. Musk, who co-founded OpenAI with Sam Altman in 2015 but left before the company took off, sued OpenAI last year, accusing it of straying from its original mission. OpenAI and Altman have denied the allegations, calling Musk’s lawsuit baseless and self-serving. Meanwhile, Musk said SpaceX’s Starship will depart for Mars at the end of 2026, carrying Tesla’s Optimus humanoid bot. He suggested human landings could begin as early as 2029 to 2031. Elsewhere, Baidu released two new AI models—Ernie X1 and Ernie 4.5—in an apparent bid to regain momentum against rivals like DeepSeek. Baidu says Ernie 4.5 outperforms OpenAI’s GPT-4.5 in text generation and has made all service tiers free. And Politico reported Oracle is in advanced discussions with the White House to take over TikTok’s US operations. Trump has until 5 April to finalise a deal or enforce a ban. (Reuters)(Business Insider)(Fortune)

7.

In-orbit reunion: NASA astronauts Butch Wilmore and Suni Williams, who were meant to spend about a week on the International Space Station (ISS) but ended up staying for nine months, are finally set to return to Earth. They originally arrived in June 2024 aboard Boeing’s Starliner, but NASA later decided it was unsafe for their return and sent it back empty. On Sunday at 12:04 am ET (3pm), SpaceX Crew-10 arrived to replace the current ISS crew, including Wilmore and Williams. The mission launched from Kennedy Space Center on Friday after a delay from Wednesday, 12 March due to a hydraulic issue. After a brief handover period, Wilmore and Williams will return to Earth aboard SpaceX Crew Dragon Freedom, along with two other astronauts. Williams now holds the record for most spacewalking hours by a woman. (NASA)(ABC News)

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Tornado toll: A massive storm system has left a trail of destruction across the central and southern US, killing at least 35 people across seven states. Since Friday, more than 60 tornadoes have been reported, along with wildfires in Oklahoma and Texas and dust storms in Kansas. Missouri has reported 12 deaths, the highest toll so far. In Kansas, a dust storm caused a 50-vehicle pileup, killing eight people. The storm threat continues as the system moves east, with tornado watches in effect from Pennsylvania to Florida. States of emergency remain in Missouri, Arkansas, Mississippi, Alabama, and Georgia. The strongest confirmed tornadoes so far, rated EF3, struck Cave City, Arkansas, and Poplar Bluff, Missouri, with winds of at least 136 mph. Nearly 200,000 homes and businesses are without power. The National Weather Service warns that severe weather, including tornadoes, damaging winds, and hail, will continue to impact the Southeast and Mid-Atlantic through Sunday. (CNN)(WaPo)(ABC)