Aurelia Butler

The annual US inflation rate is set to have fallen in December to its slowest pace in more than a year, in a further sign that price pressures have peaked amid the Federal Reserve’s historic tightening campaign.According to a consensus forecast compiled by Bloomberg, the consumer price index, published by the Bureau of Labor Statistics on Wednesday, is expected to have declined for a sixth consecutive month, registering an annual increase of 6.5 per cent.While still near a multi-decade high, this would mark the slowest pace since October 2021, and would be significantly below the 9.1 per cent threshold reached in June. Compared with the previous month, prices are predicted to have declined 0.1 per cent.The closely followed “core” measure, which strips out volatile food and energy prices and is regarded as the best indicator for inflation’s trajectory, is expected to have risen 0.3 per cent from the previous month, translating to a 5.7 per cent annual pace.Fed officials are monitoring the latest inflation data closely as they decide how much more to squeeze the US economy. Having already stepped down to a half-point rate rise last month — following four consecutive 0.75 percentage point increases — the central bank is now considering whether it can revert to a more typical quarter-point speed at its next policy meeting.In December, the Fed opted to slow the pace of rate rises since it had already raised them significantly over a short period of time. It also took into account the time it takes for changes in monetary policy to have an impact on economic activity.The decision followed a string of better than expected inflation data that suggested consumer demand is beginning to ebb more noticeably. That has occurred alongside an easing of supply chain knots, helping to push down prices for energy and everyday items such as cars, appliances and clothing.

The Fed is paying close attention to services inflation, once energy, food and housing-related costs are stripped out, which officials say is closely tied to the labour market and the wage gains that have accrued as employers have sought to overcome an acute worker shortage. Wage growth has slowed from its peak, but there are still strong jobs gains, and the unemployment rate still hovers around historic lows.The concern is that services-related price pressures will be hard to root out and require a period of very low growth and higher unemployment. Officials have sent a unified message since their December gathering that the fed funds rate will probably need to surpass 5 per cent and be held at that level throughout 2023 in order get inflation under control. It currently hovers between 4.25 per cent and 4.5 per cent.That runs counter to current market pricing, which suggests that the Fed will raise its policy rate just below 5 per cent and will deliver cuts by the end of the year. More

The news was earlier reported by Insider. The asset manager is reshaping its teams after dramatic market volatility last year, when U.S. stocks fell by their most since 2008. BlackRock (NYSE:BLK) had 19,900 employees as of Sept. 30, according to a filing with the U.S. Securities and Exchange Commission. The staff impacted amounts to less than 3% of employees, the source said. Earlier in the day, Goldman Sachs (NYSE:GS) also began laying off staff in a sweeping cost-cutting drive, a source familiar with the matter told Reuters.The BlackRock cuts come a month after BlackRock Chief Financial Officer Gary Shedlin said the firm was freezing most hiring and reducing expenses due to short-term performance challenges.The company is expected to post a 22.4% drop in fourth-quarter profit to $8.09 per share when it reports results on Friday, according to Refinitiv estimates. More

The BOJ stunned markets last month by widening the band around its 10-year bond yield target, a move that allowed the yield to rise by up to 0.50% from the previous cap of 0.25%.But the move has failed to address distortions caused in the bond market from the BOJ’s massive bond buying, heightening market speculation, analysts say. The central bank will take additional steps as early as its policy meeting next week.At next week’s meeting, the BOJ’s nine-member board will debate the side-effects of its yield curve control (YCC) policy and bond market moves since the December decision, the Yomiuri said.It will also scrutinise whether the BOJ can correct market distortions through adjustments in the amount of bonds it buys, and will take additional policy tweaks if needed, the paper said without citing sources.The dollar extended its decline against the yen after the report, briefly falling 0.42% to 131.95. More

US computer maker Dell aims to stop using chips made in China by 2024 and has told suppliers to significantly reduce the amount of other “made in China” components in its products as part of efforts to diversify its supply chain amid concerns over Washington-Beijing tensions.The world’s third-largest computer maker by shipments told suppliers late last year that it aimed to “meaningfully lower” the amount of China-made chips it uses, including those produced at facilities owned by non-Chinese chipmakers, three people with direct knowledge of the matter told Nikkei Asia.Dell’s goal was to have all chips used in its products produced in plants located outside China by 2024, they said.The move is the latest example of how the tech war between the US and China is accelerating electronics makers’ efforts to diversify production away from Asia’s biggest economy.“The goal is quite aggressive. The determined shift involves not only those chips that are currently made by Chinese chipmakers but also at the facilities in China of non-Chinese suppliers,” one person with direct knowledge of the matter said. “If suppliers don’t have responding measures, they could eventually lose orders from Dell.”Dell’s domestic rival HP has also started surveying its suppliers to gauge the feasibility of moving production and assembly away from China, sources said.In addition to chips, Dell had asked suppliers of other components, such as electronic modules and print circuit boards, and product assemblers to help prepare capacity in countries beyond China, such as Vietnam, sources added.Previously, computer makers such as Dell and HP bought chips from chip developers without worrying too much about where they were manufactured. The change of attitude has taken some in the industry by surprise.“There are thousands of components for notebook computers, and the ecosystem was so mature and complete in China for years,” an executive at a chip supplier to both Dell and HP told Nikkei Asia. “Previously, we knew Dell kind of had plans to diversify from China, but this time it is kind of radical. They don’t even want their chips to be made in China, citing concerns over the US government’s policy . . . It’s not just an evaluation, it’s not crying wolf. It’s a real and ongoing plan, and this trend looks irreversible.”Asked about its plans, Dell told Nikkei Asia: “We continuously explore supply chain diversification across the globe that makes sense for our customers and our business.” It also stressed that “China is an important market where we have team members and customers to serve”.The computer maker did not comment in detail on its diversification plans but said, “to best meet our customers’ and partners’ needs and expectations, we have geographic diversity, flexibility and stability built into our global supply chain”.Washington has been ramping up its crackdown on China’s chip sector, citing national security concerns. It unveiled several strict controls on exports to the country in October last year. Top Chinese chipmaker SMIC said in November that some of its US chip developer customers had become hesitant about placing orders following the clampdown.These tensions have provided fresh impetus for companies to shift the PC supply chain, including assembly, away from China, where it has been deeply rooted for decades. Dell and HP — which together shipped more than 133mn notebook and desktop computers in 2021, according to data provider Canalys — have most of their assembly in the Chinese cities of Kunshan, Jiangsu province, and Chongqing, Sichuan province. Apple plans to start making its MacBook computers in Vietnam by the middle of this year, which means the company would have some alternative non-China production bases for all of its major product lines.“The rising geopolitical tensions between the US and China is one of the top reasons that electronics builders are now more serious about executing the plans to build a meaningful alternative production base besides China. That is true for Apple as well as other American electronics makers and brands,” Eddie Han, an analyst with Isaiah Research, told Nikkei Asia.Ivan Lam, a tech analyst with Counterpoint, told Nikkei Asia that more manufacturing bases for electronics would start to emerge over the next five to 10 years.“The regional production hubs will be emerging in India, in south-east Asia and also in Latin America, and the shift will be starting from only product assembly to involve more components,” Lam said. “We still think it will take a lot of time, but this time the trend is really emerging and that will be a tech supply chain’s future.”Asked by Nikkei Asia for comment on its plans, HP said: “We have a robust supply chain operation in China and around the world to serve our customers.”A version of this article was first published by Nikkei Asia on January 5 2023. ©2023 Nikkei Inc. 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