Jerome Powell, Chairman of the US Federal Reserve, at a news conference after the Federal Open Market Committee meeting in Washington, D.C., on December 18, 2024.
cyclists | Bloomberg | Getty Images
This report is from today's CNBC Daily Open, the international markets newsletter. CNBC Daily Open keeps investors informed 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
The Fed is cautious about inflation and Trump's policies
At their meeting in December, U.S Federal Reserve officials expressed concern that inflation will remain stubbornly above the central bank's 2% target, as well as about the potential impact of US President-elect Donald Trump's policies. So they will be responsible Move slower on interest rate cutsShow the minutes issued on Wednesday.
US stocks shrugged off inflation concerns
US stocks rose by Slight gains on Wednesday in spite of 10-year Treasury bond yield I touched her Highest since April After the release of the minutes of the Federal Reserve meeting. Asia Pacific markets It traded mostly lower on Thursday. Australia Standard & Poor's/ASX 200 It closed 0.24% lower as data showed the country's performance Retail sales It rose less than expected in November.
Asian central banks are facing a strong US dollar
Asian currencies, such as the Chinese yuan, Japanese yen and Korean won, have fallen against the US dollar since Trump won the presidential election in November. This poses a A dilemma for central banks in AsiaA weaker currency would boost exports but could increase imported inflation, complicating banks' ability to direct domestic economic policy.
Fears of deflation in China
China's consumer price inflation in December rose 0.1% year-on-year, Data As shown by the National Bureau of Statistics, Thursday. On a monthly basis, China's CPI came in flat, compared to a 0.6% decline in November. China's persistently low consumer inflation indicates that China is suffering from weak domestic demand, Raising fears of deflation.
Quibbling about quantum computing
Nvidia CEO Jensen Huang said Tuesday that bringing “very useful quantum computers” to market may be possible It takes 15 to 30 yearsThis caused quantum computing stocks to decline on Wednesday. Alan Baratz, CEO D-wave quantumwhose shares fell by more than 30%, Huang said “Dead error“We at D-Wave are commercial today,” Baratz told CNBC.
(PRO) Look for this Taiwanese chip supplier, says Bernstein
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 Taiwanese chip supplier. Bernstein says the supplier will see significant financial benefits from the partnership starting in 2026.
Bottom line
On paper, the minutes from the Fed's December meeting were bad news for investors. Officials were concerned about inflation and the impact of Trump's stated policies (although Trump was not explicitly named).
“Almost all participants viewed upside risks to inflation expectations as having increased,” the minutes said. “Participants cited stronger-than-expected recent readings on inflation and the potential impacts of potential changes in trade and immigration policy.”
As a result, Fed officials see the pace of future interest rate cuts slowing.
Upside risks of inflation, problematic economic policies, and lower-than-expected interest rate cuts: This is a strong, bitter drink for investors to swallow. The yield on 10-year Treasury bonds reached 4.730% during intraday trading, the highest level since April.
However, stocks mostly ignored that warning to rise on Wednesday. the Standard & Poor's 500 He added 0.16% Dow Jones Industrial Average It rose by 0.25%. the Nasdaq Composite It fell by 0.06% – the same as technology stocks Palantir, Advanced micro devices and The precise strategy It was a rough day – but this is still close to a flat line and not a sharp decline.
It appears that investors have already taken inflation warnings into account – the Fed's warnings Latest plot pointwhich forecast cuts of just a quarter of a percentage point in 2025, had already rattled markets when it was released in December.
Fed Governor Christopher Waller also offered some help to investors. He said in his speech in Paris He said The recent stubbornness of inflation has been driven primarily by “assumed” prices such as housing services, while “observed” prices for other goods and services have shown a decline in inflation.
Waller added that if economic conditions go his way, he would “support continuing to cut interest rates in 2025.”
What is not priced in is the US jobs report for December, due on Friday. This could be the next catalyst for the markets.
— CNBC's Jeff Cox, Sean Conlon and Pia Singh contributed to this report.
