Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
Jerome Powell, chairman of the US Federal Reserve, at a news conference after a meeting of the Federal Open Market Committee in Washington, DC, on December 18, 2024.
To the Dragon | Bloomberg | Getty Images
This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
Fed cautious on inflation and Trump policies
At its December meeting, the United States Federal Reserve officials have expressed concern that inflation will remain stubbornly above the central bank’s 2% target, and over the possible impact of US President-elect Donald Trump’s policies. Consequently, the officials will be it moves more slowly on interest rate cutsminutes released on Wednesday showed.
US stocks have shrugged off inflation concerns
US stocks have soared a small gain on Wednesday even if the 10-year Treasury yield touch his highest since April after the release of the minutes of the Fed. Asia-Pacific markets mostly traded lower on Thursday. Australia S&P/ASX 200 closed 0.24% lower as the data showed those of the country retail sales rose less than expected in November.
Asian central banks make the US dollar strong
Asian currencies such as the Chinese yuan, the Japanese yen and the Korean won have fallen against the US dollar since Trump won the presidential election in November. What pose a conundrum for Asia’s central banks: A weaker currency would increase exports, but could increase imported inflation, complicating the ability of banks to guide domestic economic policy.
Deflation fears in China
China’s consumer price inflation in December was up 0.1% year-on-year, data from the National Statistics Office showed on Thursday. On a monthly basis, China’s CPI came flat, compared with the 0.6% drop in November. China’s persistent consumer inflation indicates that China is struggling with weak domestic demand, raises fear of deflation.
Microsoft cuts jobs based on performance
Microsoft is it cut a small percentage of jobs in all departments, based on performance, the company confirmed to CNBC on Wednesday. Business Insider first report on the plans of the company. The job cuts will affect less than 1% of employees, said a person familiar with the matter, who asked not to be named to discuss private information.
[PRO] Watch out for this Taiwanese chip supplier, Bernstein says
At CES, Nvidia announced a desktop supercomputer aimed at AI researchers and data scientists. The computer will feature Nvidia’s Grace Blackwell Superchip, which Nvidia will produce in partnership with a Taiwanese chip supplier. The supplier will see significant financial benefits from the partnership starting in 2026, Bernstein says.
The background
On paper, the minutes for the Fed’s December meeting spelled bad news for investors. Officials were concerned about inflation and the impact of Trump’s stated policies (although Trump is not explicitly named).
“Almost all participants judged that risks to inflation have increased,” the minutes say. “Participants cited recent stronger-than-expected readings on inflation and the likely effects of potential changes in trade and immigration policy.”
As a result, Fed officials see the pace of future interest rate cuts slowing.
Inflation risks, problematic policies for the economy and less tax cuts than expected: It is a strong and bitter beer for investors to swallow. The yield on the 10-year Treasury note climbed 4,730% during intraday trading, the highest since April.
Still, stocks mostly shrugged off that warning to pop up on Wednesday. U S&P 500 added 0.16% and the Dow Jones Industrial Average rose 0.25%. U Nasdaq Composite slipped 0.06% – tech stocks like Palantir, Advanced Micro Devices and Micro strategy had a rough day – but it’s still close to the flat line and not a precipitous drop.
Investors, it seems, had already priced in inflation warnings – the Fed the last dot plotwhich projected just two quarter-point cuts in 2025, had already shaken markets when it was released in December.
Fed Governor Christopher Waller also provided some relief to investors. Speaking in Paris, he he said The stubbornness of inflation recently had been driven mainly by “imputed” prices such as housing services, while “observed” prices for other goods and services show disinflation.
Waller added that if economic conditions go according to his opinion, he “supports continuing our policy rate in 2025”.
What is not cheap is the US employment report for December, due on Friday. That could be the next catalyst for the markets.
— CNBC’s Jeff Cox, Sean Conlon and Pia Singh contributed to this report.
