The following audio episode provides an in depth discussion of this weeks news from "The Edge".
🟡 The Weekly Edge – 5th June 2025
Trade Tantrums, Crude Signals & Consumer Cracks
— Brought to you by the team at Gilt Investments
Welcome back to The Weekly Edge—your lens on a global system creaking under the weight of broken trade deals, cracked consumer confidence, and central banks running out of script.
This week, the message is clear: this isn’t a pause or a soft patch—it’s a structural transition. The old rules that defined the post-GFC world are breaking down.
📦 Trade War Redux – The Truce is Over
The gloves are off. Just weeks after the Geneva détente, U.S.–China trade tensions are flaring again.
The U.S. slapped a 54% tariff on Chinese goods, reimposed visa bans, and escalated restrictions on chip exports. China retaliated, accusing the U.S. of breaching the deal.
This isn’t just geopolitical drama—it’s an inflation accelerant. These tariffs are a tax on working families, baked straight into the price of everyday goods. And central banks? They’re powerless here. Rate hikes can’t fix trade policy. But cuts risk reigniting price pressures. A classic monetary Catch-22.
🛢 OPEC’s Crude Pivot – From Discipline to Desperation
OPEC+ just announced a 411,000 barrels/day production hike for July—into a soft demand environment.
This is a major shift. Just months ago, producers were defending $80 oil. Now? They’re prioritizing revenue over price stability.
Falling oil prices might ease headline inflation, but make no mistake: this is a deflationary signal. If crude drops further, it won’t be because supply is abundant—it’ll be because demand is breaking. And that’s a warning, not a win.
🏦 Central Banks – Out of Moves, Out of Time
The Fed is split. Rate cuts risk looking weak. Staying tight risks breaking the consumer. Meanwhile, Canada’s already cut to 2.75%—a sign of preemptive easing elsewhere.
We’re witnessing the limits of monetary policy. Inflation today is politically driven, not demand-driven. And when rate tools meet trade shocks, the result isn’t control—it’s confusion.
The age of central bank omnipotence is over. Coordination, not just calibration, is what’s missing.
🇦🇺 Australia – Calm, But Exposed
At home, things look steady. GDP rose 1.3% YoY, Aussie bonds are stable, and housing remains buoyant post-rate cuts.
But under the surface? We’re skating on global ice. With over $400 billion in offshore borrowings, any global credit shock hits our banks first. Funding spreads, capital flows, even ratings pressure—none of it is local, but all of it is real.
This isn’t resilience. It’s sensitivity in disguise.
💳 U.S. Consumers – Stretched to the Breaking Point
Credit card delinquencies just hit 11.35%—the highest since 2011. Emergency savings are being tapped for groceries and rent. And the tariff surge hasn’t even landed yet.
The American consumer—once the engine of global growth—is buckling. Rising prices, stagnant wages, and looming unemployment paint a stagflationary picture.
This isn’t a soft patch. It’s a structural consumption shock. And the Fed is behind the curve—still chasing demand-driven models in a cost-driven world.
🧠Final Take – Forget the Old Playbook. This Is Regime Change.
Here’s what we’re watching:
• U.S.–China trade friction is back—with inflationary consequences.
• OPEC is signalling soft demand—not strength.
• Central banks are reactive and divided.
• Australia remains vulnerable to offshore credit stress.
• U.S. consumers are stretched past breaking.
This isn’t a time for bravado. It’s a time for discipline, flexibility, and realism.
The system isn’t resetting—it’s restructuring. And if you want to stay ahead, you don’t need to predict what’s next. You need to prepare for what’s already unfolding.
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Stay nimble. Stay informed. Stay steady.
We’ll see you next week on The Weekly Edge.
Disclaimer
This publication has been prepared by Gilt Investments Pty Ltd and is for informational purposes only. It contains general financial product advice that does not take into account your personal objectives, financial situation, or needs.
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