The US national debt has surpassed a record $US39 trillion ($A55 trillion), a milestone that comes just weeks into the US-Israeli war in Iran.

The unprecedented figure revealed on Wednesday highlights competing administration priorities, from passing a massive tax law and boosting defence spending and immigration enforcement to chipping away at the debt itself — the latter of which Donald Trump promised to do as both a candidate and as president.

The Government Accountability Office outlines some of the impact of rising government debt on Americans — including higher borrowing costs for things like mortgages and cars, lower wages from businesses having less money available to invest, and more expensive goods and services.

Advocates for a balanced budget also warn that the long-term trend of borrowing more and paying more in interest will force Americans to face tougher fiscal trade-offs ahead.

The trajectory of the rising costs is also a concern. The federal debt has surged under both Republican and Democratic presidents, most recently fuelled by wars, large-scale pandemic spending and tax cuts.

The US national debt hit $US38 trillion ($A54 trillion) five months ago — and $US37 trillion ($A52 trillion) two months before that.

White House economic adviser Kevin Hassett on Sunday estimated the war in Iran had cost the US more than $US12 billion ($A17 billion) so far. It is unclear when the war will end.

Representatives from the White House and Treasury Department did not immediately respond to an Associated Press request for comment on the debt milestone Wednesday.

The US Federal Reserve has held interest ‌rates steady and projected higher inflation, steady unemployment and only a single reduction in borrowing costs this year as officials took stock of economic risks from ‌the US and Israeli war with Iran.

New projections from US central bank policymakers showed the Fed’s benchmark overnight interest rate would fall by just a quarter of a ‌percentage point by the end of this year, with no hint of the timing of such a move. 

All but one of the 12 voting members of the US Federal Reserve has voted to keep rates at a range of 3.5 to 3.75 per cent.

That view was unchanged from previous projections and remains out of step with President Donald Trump’s demand for a sharp drop in borrowing costs.

US stocks pared losses slightly after the release of the Fed’s policy statement and projections, with the S&P 500 index last down about 0.6 per cent and the Nasdaq Composite down about 0.5 per cent.

The dollar pared its earlier gains, with the dollar index last up ‌0.27 per cent. US Treasury yields ‌also pared gains, with the ⁠10-year yield last up at 4.214 per cent.

Inflation, as measured by the Fed’s preferred gauge, was expected to end ​the year at 2.7 per cent, not far below its current rate and higher than the 2.4 per cent projected in December, possible fallout from the spike in global oil prices that followed the start of the bombing campaign against Iran.

“Implications of developments in the Middle East for the US economy are uncertain,” the Fed said in a policy statement that also noted ongoing stable unemployment.

In a press conference following the outcome of the FOMC meeting, Fed Chair Jerome Powell reiterated the uncertainty the war creates for the outlook.

“In ⁠the near term, higher energy prices will push up overall inflation, but it is ‌too soon to ​know the scope and duration of the potential effects on the economy,” he said.

He added that monetary policy is “well positioned to determine the extent and timing of additional adjustments ​to our policy ‌rate based on the incoming data, evolving outlook, and the balance of risks”.

The new rate and economic projections showed the Fed, for now, largely looking through ​the oil shock, with policymakers still expecting to lower rates this year and anticipating inflation to be 2.2 per cent by the end of 2027, near the central bank’s 2.0 per cent target.

Notably, no policymakers saw rates needing to move higher by the end of this year, though one official anticipated a ​rate increase ​in 2027.

Economic growth was upgraded slightly, to 2.4 per cent for 2026 versus 2.3 per cent ​in December, and the projected unemployment rate was unchanged at 4.4 per cent.

The decision to hold the policy rate steady was widely expected in financial markets, but the projections provide fresh information about how the US central bank is assessing the economic impact of a war that has disrupted global oil markets. 

Oil prices have jumped from below $US80 ($A113) a barrel to $US108 ($A153) ahead of the Fed’s policy decision, ​with US gasoline prices also spiking and new inflation data showing wholesale prices rising faster than expected even before the conflict began.

Other than the reference ​to the war, the Fed’s new ⁠statement was little changed from the one issued at the end of its January 27-28 meeting.

The shuttering of a Western Australian lithium refinery after just four years should serve as a warning as China pumps more than A$160 billion into overseas critical minerals and metals endeavours.

US company Albemarle shut up shop at its South West lithium refinery in February, citing its struggle to compete with China’s low-cost production.

Climate Energy Finance director Tim Buckley said its closure was a consequence of China’s strategic diversification to boost critical minerals and clean tech capacity.

 “That is a serious problem,” he told AAP.

“We will stay a dig and ship country if we can’t actually get other countries to value the geopolitical stability that we offer.”

Mr Buckley has co-authored a report on China’s evolving strategy to entrench its dominance in lithium, copper, nickel, rare earths and other elements of the low carbon supply chain. 

The Asian powerhouse has invested heavily in domestic mining and manufacturing capacity as well as launched a comprehensive foreign investment strategy targeted at the Global South.

Moving beyond the extractive mega-projects of the past, China is investing in smaller, high-tech manufacturing facilities offshore to secure long-term access to materials.

The massive $160 billion total outbound investment tracked by the think tank represents China’s strategic move to dampen its over-reliance on a few key export markets, including Australia.

As well, little of China’s overseas spending is landing in Australia, with a 85 per cent collapse in foreign direct investment since 2018 identified by consultancy KPMG.

Mr Buckley said Australia needed to adapt quickly to China’s reshaping of the green economic geography.

“It is imperative that we act now to shift these dynamics in Australia’s favour to become a renewables-powered mining and value-adding superpower or risk remaining on the sidelines as the world’s quarry in the new global economy,” he said.

In the absence of a strong international carbon pricing signal to bolster greener manufacturing, Mr Buckley says Australia should be doubling down on “green energy statecraft”.

This involves trade arrangements and strategic investments that help key trade partners meet Paris climate commitments while securing a higher green premium for Australian processed goods.

The agreement between Australia’s Lynas Rare Earths and Japan to supply rare earth long-term at a guaranteed floor price was held up as a “perfect example” of green energy statecraft. 

Australia should also be looking for opportunities carefully and selectively engage China – still its biggest trading partner – on green partnerships before the diversification away becomes more pronounced.

The $81 billion in federal capital support under ‘future made in Australia’ was described as “directionally correct” but insufficient without a carbon pricing signal to entice private money.

The think tank recommends Australia work toward an explicit, whole-of-economy carbon price and leverage Energy Minister Chris Bowen’s COP31 presidency to push for a regional Asian carbon border adjustment mechanism.

Australian homeowners are in their strongest financial position, with median resale profits at all-time highs.

In the second half of 2025, 97.5 per cent of house resales and 88.3 per cent of unit resales across Australia turned a profit, according to Domain’s latest Profit and Loss Report.

The median gain on a house in an Australian capital city was $530,000, up 14.7 per cent annually, comparing with $330,000 across the regions, up 15.8 per cent.

Homeowners were holding onto their properties for longer and realising higher sales prices, while supply and demand continued to pressure values, Domain’s economics and research chief Nicola Powell said.

“We know that those (high-growth) markets really have been Perth and Brisbane, as well as Adelaide, leading the way, and that’s ultimately because of a severe lack of housing, very tight rental markets and also strong rates of population growth,” Dr Powell told AAP.

Surging property prices also widened the gap between homeowners and those trying to get their feet on the property ladder.

“It’s challenging for first-time buyers that perhaps don’t have family support, and you can understand why the ‘bank of mum and dad’ has become such a significant lender in our housing market,” Dr Powell said.

Only one in every 200 house sales in Brisbane and Perth failed to turn a profit, but in terms of realised profit, one capital city towered above the rest.

“Sydney remains that equity heavyweight,” Dr Powell said.

“It has the depth of profit and has the highest profit margin out of all of our major capital cities.”

The median profit for a home sold in Sydney was $750,000, up 11.1 per cent in annual terms.

This was compared to $580,000 in Brisbane, $539,500 in Adelaide, $528,000 in Perth, and $390,000 in Melbourne, where more than two in every 50 sales failed to make a profit.

Melbourne also had the lowest annual profit growth of 1.6 per cent, well below the 14.9 per cent national average and the more than 22.9 per cent growth recorded in Brisbane and Perth.

Median profits in Darwin houses were the lowest at $201,000, while Canberra was the riskiest place to buy a house, with almost seven per cent of sales resulting in a loss.

Units were also making record profits, but a median windfall of $228,000 nationally was significantly slimmer than $440,000 for houses, and the property group was more likely to make a loss, with 11 per cent selling for less than their buying price.

Brisbane was the best place to own a unit, which sold at a median profit of $235,000, and less than one in 100 sold for a loss.

A real life fairytale will come a full circle as Denmark’s Queen returns home, this time with a king by her side.

King Frederik and Queen Mary will bring their whirlwind six-day Australian tour to a close with a much-anticipated visit to Hobart on Thursday.

It will mark the Danish monarchs’ first official visit to Mary’s home state in more than two decades, their first since assuming the throne in 2024.

Locals are gearing up for a glimpse of the couple, with crowds expected to gather along the city’s waterfront for a schedule greeting from 4.30pm.

“I wouldn’t miss it for the world,” Hobart resident Vivian Dance told AAP.

“Queen Mary is very special to Hobart, she is what dreams are made of getting to marry her prince.”

Hunter Street on the city’s waterfront will be closed to traffic to afford onlookers an uninterrupted view, a sign the city is firmly in the grip of royal fever.

Local mother Ashley Blakesley plans to leave work early for a chance to welcome the homecoming queen.

“I’ve been warning my workmates I might be off work for a little bit tomorrow,” she told AAP.

“If I happen to get word (Queen Mary) is down at a school or somewhere, I’ll shut my computer and head off.”

She plans to bring with her a newspaper clipping from 2024, when her son Harrison joined other local students to plant a tree marking Queen Mary’s coronation.

Ms Blakesley visits the tree at least once a week, on her regular trip to the playground where it was planted.

“I often just glance over to see how tall it’s getting, it makes me smile,” she said.

The self described “keen royal watcher” has been lucky enough to meet King Charles, but said there is not doubt Queen Mary is her favourite royal.

“I just think it’s amazing that a lady from Hobart is now queen of a country,” she said.

Their Tasmanian itinerary remains under wraps but is likely to include a stop in with the queen’s relatives, including her father John Donaldson, a former applied mathematics professor.

Born Mary Donaldson, the future queen was raised in the Hobart suburb of Taroona, on the city’s southern fringe.

Though her royal lodgings are thousands of kilometres away, Queen Mary’s link to the island state is deep and enduring, a point made by Premier Jeremy Rockliff in an advance of the visit.

“Tasmanians and Queen Mary have a special bond, and we are delighted the King and Queen of Denmark will be finishing up their Australian visit in our great state,” he said.

“This is a significant national event, and it’s fitting for Tasmanians to be able to welcome Queen Mary home in-person.”

It follows a jam-packed two-day tour of Victoria, which included a green transition business event, a pop-up Danish-Australian art installation, tours of sustainable and renewable energy developments and a kick of the footy at the MCG.

They brought their tour of the mainland to an end with an evening reception at Melbourne’s botanic gardens on Wednesday.

The Hobart stop-in will offer a personal ending to the pair’s whistle-stop tour, designed to deepen trade ties between Queen Mary’s adopted and home nations, with a focus on a shared, green future.

Fuel is expected to begin flowing from Australia’s emergency stockpiles imminently in response to the war in the Middle East, as state and territory officials prepare for crisis talks on the issue.

An agreement to release extra petrol and diesel to regional areas suffering critical shortages was reached between Energy Minister Chris Bowen and Australia’s fuel companies on Wednesday, AAP has learned.

The deal was discussed at a roundtable convened by Transport Minister Catherine King, two sources familiar with the meeting said, but it is yet to be formally announced by the government.

It comes ahead of a national cabinet meeting on Thursday between the prime minister and state premiers to discuss major price shocks and shortages driven by the war between the US, Israel and Iran.

State leaders are demanding faster action on the crisis and a long-term plan from the Commonwealth to deal with fuel shortages, if the conflict isn’t resolved quickly.

National cabinet plans to appoint a fuel tsar to help lead the nation’s response, Prime Minister Anthony Albanese revealed on Wednesday.

“I’ll be asking state premiers and chief ministers to appoint someone, a point person, so that the Commonwealth can collaborate in a way to make sure we deal with the challenges which are there,” he told reporters in Burnie, Tasmania.

NSW Premier Chris Minns said the gathering was an opportunity to deal with the challenges around fuel supply, particularly the availability of diesel.

“We’re keen to see a national plan that sets out a clear escalation pathway, including what further actions may be taken if the conflict continues and conditions worsen,” he said in a statement.

On top of allowing fuel companies to release a week’s worth of petrol and diesel from their emergency stockpiles, the government has eased quality standards to allow more fuel into the market.

But it has kept its cards close to its chest when asked about further potential measures.

Treasurer Jim Chalmers flagged more announcements in the coming days, but provided little detail.

“We are preparing for the risk of more prolonged disruption, including through work with international partners, to help insulate more fuel-exposed industries like farming, transport and mining,” he told ABC TV on Wednesday.

Western Australian Premier Roger Cook said he’d use the meeting to raise concerns about the length of time taken to release fuel from the nation’s strategic reserves.

“The last thing we need is some bureaucrat in Canberra sitting on their hands, taking their time to consider what is a national challenge,” he told reporters on Wednesday.

The Australian Trucking Association has called for disaster funding to be provided to transport companies which are dealing with the rising cost of diesel, and a reduction in the road user charge.

Logistics companies have warned they’re under significant pressure from fuel price rises, which will likely be passed on to shoppers.

Australia’s jobs market is expected to give the Reserve Bank more to worry about.

Economists predict official labour force data, due to be released by the Australian Bureau of Statistics on Thursday, will show the unemployment rate held at 4.1 per cent in February.

Combined with an expected increase in employment of 20,000 jobs, it will compound the central bank’s view the jobs market is too tight and contributing to inflation, Westpac economist Pat Bustamante says.

“If it comes in as expected, the RBA will more likely than not view it as consistent with their view that capacity is constrained,” he told AAP.

The Reserve Bank board hiked interest rates for a second straight month on Tuesday, as surging oil prices caused by the Iran war fuelled fears of higher inflation.

But governor Michele Bullock made clear that it was domestic economic issues, not the overseas supply shock, that drove the decision.

“Higher petrol prices will add to inflation, but they’re not the reason for today’s decision,” she told reporters after the meeting.

“Inflation was already too high, reflecting the fact that demand is outstripping supply.”

Mr Bustamante said it was clear the bank was more concerned about the risk that the conflict will drive up inflation than the threat it will crash the economy and drive up unemployment, which the RBA must manage as part of its dual mandate.

But even though the unemployment rate is forecast to stay at a relatively low 4.1 per cent, there are signs the jobs market is starting to turn.

Instead of being driven by an uptick in hiring rates, the fall in the jobless rate from 4.4 per cent in September is due to a decline in participation, Mr Bustamante said.

If the participation rate had stayed steady, the unemployment rate would actually have risen to 4.5 per cent.

Rather than demand firming as the economy gains strength, labour supply is falling, adding to capacity pressures.

As the war in the Middle East drags on, and oil prices remain elevated, similar stagflationary symptoms could become more common across the economy.

Changes to the way capital gains and businesses are taxed are on the cards, as Treasurer Jim Chalmers promises more reforms to level the playing field for younger generations and drive stronger investment.

While the extent of the reforms announced in May will depend on how much the government can afford and global developments, Dr Chalmers’ fifth budget will be full of ambition, he will promise in a speech on Thursday.

His pledge comes amid reports Treasury is drawing up changes to the capital gains tax discount, negative gearing, trusts and tax exemptions for electric vehicles. 

Uncertainty caused by conflict in the Middle East has only heightened the need for reform, Dr Chalmers will say.

“Any reform would be guided by some clear principles,” he will tell a gathering of business economists in Melbourne.

“Firstly, we recognise an outdated tax system is weighing on the opportunities faced by younger Australians and future generations. So any changes would have a substantial focus on our intergenerational responsibilities. 

“Second, we are focused on better incentivising productive business investment, if we can afford to.  

“And third, making the system simpler and more sustainable.”

The three principles are the same Dr Chalmers said would guide his thinking on tax reform following his August 2025 economic roundtable.

A Greens-led parliamentary inquiry into the capital gains tax discount found the measure unequally benefited wealthier Australians, skewing the market towards investors at the expense of owner-occupiers.

Labor senators Ellie Whiteaker and Richard Dowling, who signed off on the report, added that younger Australians increasingly faced different economic circumstances to previous generations.

Advocates for ambitious changes, including independent MP Allegra Spender and a raft of economists, have told AAP the 2026 budget will be the government’s best opportunity for tax reform in decades, because of Labor’s massive parliamentary majority and the long period until the next federal election.

Dr Chalmers will also use his speech to warn of “hard decisions” in the budget as he seeks to balance economic productivity, reform and helping the nation ride the wave of uncertainty driven by the war in the Middle East.

“The conflict in the Middle East is a stark reminder of how quickly the global economic outlook can change,” he will say.

“It is adding to inflation risks, weighing on growth, and increasing already elevated uncertainty. 

“But it is also a stark reminder of why addressing our three key economic challenges is so urgent. 

“All this economic uncertainty and volatility is a reason for more reform, not less.”

Like many laid-back locals, Luke Pote doesn’t usually stay up to date with weather advice at his remote community.

But that looks set to change as one of the biggest cyclones in recent memory barrels toward Queensland’s far north.

Tropical Cyclone Narelle could impact the coast as a dangerous category five system early on Friday, bringing winds up to more than 250km/h.

Damaging gusts of up to 155km/h are expected to start bombarding the far north from Thursday.

Cooktown, north of Cairns, appears to be in the monster system’s sights after it makes landfall further north at Coen.

For the time being though, it is business as usual for Mr Pote who owns Cooktown Orchid Travellers Park, one of the town’s only grocery stores.

“We’ve got heaps of beer, food and fuel – we’re good to go,” Mr Pote told AAP on Wednesday.

“We don’t worry about it until it’s right on our doorstop. There’s nothing you can do about it anyway.

“The generators are ready to go – we plan for the wet season every year. We stock up on potatoes and pumpkins.”

Mr Pote was shocked to discover Narelle was expected to reach category five.

“Really? Wow. I try not to watch the weather, but oh well. She’ll be right,” he said.

“Honestly, it hasn’t been that bad – there’s not too much panic buying yet, I reckon there might be a bit of a rush though if we get hit by a five.

“But there’s not much you can do but wait it out and get ready for the clean-up.”

Queensland Premier David Crisafulli said the system might be the biggest many people had seen in living memory.

“We’re asking people to prepare for waves, for wind, for rainfall, for flooding but communities will get through it if they do preparations,” Mr Crisafulli said.

After crossing Cape York the storm was then expected to impact the Northern Territory’s Top End before moving into Western Australia’s Kimberley coast.

When it reaches the NT, it is likely to be downgraded to a category three storm.

Narelle will be the first category five storm to hit Queensland since Cyclone Marcia devastated central parts of the state in 2015.

Japan recorded a trade surplus of 57.3 billion yen ($A507 million) in February, reversing January’s deficit.

Exports grew at a better-than-expected 4.2 per cent in February to 9.57 trillion yen, the Finance Ministry’s seasonally adjusted preliminary data released on Wednesday revealed.

Imports grew 10.2 per cent on-year to 9.51 trillion yen following a 2.5 per cent contraction in January.

Japan posted a 1.15 trillion trade deficit that month.

Import costs are likely to rise as the effective closure of the Strait of Hormuz due to the war against Iran drives up oil and other energy prices.

Japan imports almost all its oil, and Brent crude – the international standard – has jumped in recent weeks to about $US100 ($A141) a barrel. 

Geopolitical uncertainty, especially the war in Iran, loom large for Japan’s export-reliant economy, but a weak yen is likely to work as a plus. The US dollar has been trading at about 159 yen, when it was below 150 yen a year ago. 

Shipments to China declined 10.9 per cent from the same month a year ago, although demand was likely unusually weak due to this year’s Lunar New Year holidays falling in February. 

Exports to the US dropped eight per cent, as auto exports fell. President Donald Trump’s tariffs on Japanese autos, now at 15 per cent, continue to weigh on Japan’s automakers and auto supply manufacturers.

Exports to Europe held up, growing 17 per cent in February from the same month a year ago. Exports to the rest of Asia also grew, by 2.8 per cent.

Investors are eyeing what the Bank of Japan might do on interest rates as the central bank’s policy board concludes its two-day meeting Thursday.

“Central banks are waiting to see if these elevated oil prices are a temporary blip or a running theme for 2026, in which case we may see more global peers pivot from a dovish to a hawkish stance,” said Tim Waterer, chief market analyst at KCM Trade.

Investors are also closely watching what deals, if any, could come from the summit later this week between Trump and Sanae Takaichi, Japan’s first woman prime minister.