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Jerome Powell, chairman of the U.S. Federal Reserve, speaks at a press conference following a meeting of the Federal Open Market Committee in Washington, D.C., on December 18, 2024.
Al Drago | Bloomberg | Getty Images
This is a report from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open provides investors with information 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 the December meeting of the US Federal Reserve officials expressed concern that inflation will remain stubbornly above the central bank’s 2% target, as well as the potential impact of US President-elect Donald Trump’s policies. Accordingly, the officials would be move more slowly to lower interest ratesreports released on Wednesday showed.
US stocks declined on inflation concerns
US stocks fell a slight increase on Wednesday even if The 10-year Treasury yield touched him the highest since April after the release of the Fed minutes. Asia-Pacific markets mostly traded lower on Thursday. Australia S&P/ASX 200 closed 0.24% lower, the country’s data showed retail sales rose less than expected in November.
Asian central banks face 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 creates a a conundrum for Asia’s central banks: A weaker currency would increase exports, but could increase imported inflation, complicating banks’ ability to manage domestic economic policy.
Fears of deflation in China
Consumer prices in China rose 0.1% year-on-year in December, data This was reported by the National Bureau of Statistics on Thursday. On a monthly basis, China’s CPI remained unchanged from a 0.6% decline in November. Persistently low consumer inflation in China indicates that China is struggling with weak domestic demand, fueling fears of deflation.
Microsoft cuts jobs based on performance
Microsoft there is cutting a small proportion of jobs across departments, based on performance, the company confirmed to CNBC on Wednesday. Business Insider first announced the company’s plans. The job cuts will affect less than 1% of employees, said a person familiar with the matter who spoke on condition of anonymity to discuss private information.
(PRO) Keep an eye on this Taiwanese chip supplier, says Bernstein
At CES, Nvidia announced a desktop supercomputer aimed at artificial intelligence researchers and data scientists. The computer will be powered by Nvidia’s Grace Blackwell superchip, which Nvidia will manufacture in partnership with Taiwanese chip supplier. The supplier will reap significant financial benefits from the partnership starting in 2026, Bernstein says.
Bottom line
On paper, the minutes of the Fed’s December meeting contained bad news for investors. Officials were concerned about inflation and the impact of Trump’s stated policies (although Trump was not directly named).
“Practically all participants expressed the opinion that the risk of raising the inflation forecast has increased,” the report says. “Participants cited recent stronger-than-expected inflation figures and the likely impact of potential changes in trade and immigration policies.”
As a result, Fed officials see the pace of interest rate cuts slowing down in the future.
Risks to rising inflation, problematic policies for the economy and a smaller-than-expected rate cut: it’s a strong and bitter brew for investors to swallow. The 10-year Treasury yield hit 4.730% in intraday trading, the highest since April.
Still, stocks largely shrugged off that warning to rally on Wednesday. The S&P 500 added 0.16% and Art Dow Jones industrial index grew by 0.25%. The Nasdaq Composite slipped 0.06% — technology stocks as Palantir, Advanced Micro Devices and Micro strategy had a rough day – but it’s still close to a flat line, not a sharp drop.
Investors seem to have already factored in the inflation warning from the Fed most recent dot plotwhich forecast just two cuts of a quarter of a point in 2025, had already rattled markets when it was published in December.
Fed Governor Christopher Waller also offered some help to investors. Speaking in Paris, he said The recent persistence of inflation has been driven mainly by “notional” prices such as housing services, while “observed” prices of other goods and services show a decline in inflation.
Waller added that if economic conditions pan out in his view, he would “support continued reductions in our base rate in 2025.”
What’s not as highly regarded is the US jobs report for December, which is due out on Friday. This could be the next catalyst for the markets.
— CNBC’s Jeff Cox, Sean Conlon and Pia Singh contributed to this report.
