Aurelia Butler

The Lithuanian government, meanwhile, ordered the state-owned railway company not to sign a contract with a China-owned Spanish bridge builder, citing “national security interests,” the prime minister’s spokesperson told the Baltic News Service.Lithuania is under pressure from China, which claims democratically ruled Taiwan as its own territory, to reverse a decision last year to allow the island to open a de-facto embassy in Vilnius under its own name. Taiwanese representations in other countries, except the unrecognized Somaliland, are named after Taiwan’s capital Taipei.China has recalled its ambassador to Lithuania and downgraded diplomatic ties, and is pressuring companies like German car parts giant Continental to stop using Lithuanian-made components. It has also blocked Lithuanian cargos from entering China.U.S. Secretary of State Antony Blinken referred to China’s pressure on Vilnius in a joint news conference with German Foreign Minister Annalena Baerbock after a meeting in Washington and vowed to work with Berlin and others against such “intimidation.”Blinken said Germany and the United States agree on the importance of trans-Atlantic coordination on China “because it poses a significant challenge to our shared values, to the laws, rules and agreements that foster stability, prosperity and freedom worldwide.””We have immediate concern about the government of China’s attempts to bully Lithuania … China is pushing European and American companies to stop building products with components made in Lithuania, or risk losing access to the Chinese market, all because Lithuania chose to expand their cooperation with Taiwan.”Lithuania’s export-based economy is home to hundreds of companies that make products such as furniture, lasers, food and clothing for multinationals that sell to China.The head of Taiwan’s representative office in Lithuania, Eric Huang, said the strategic investment fund would be funded by Taiwan’s national development fund and backed by its central bank. “We will establish the fund as soon as possible and we hope this year we will have some tangible results … I can imagine the first top priorities will be semiconductor, laser (and) biotechnology,” he told a news conference.Taiwan has redirected 120 shipping containers from Lithuania blocked by China into its market, and will take “as much as possible” more, Huang said.Taiwan will also accelerate its approval process for Lithuanian dairy and grain exports into Taiwan and seek to link Lithuanian businesses into Taiwanese supply chains, he said.Integrating Lithuania’s laser industry into manufacturing semiconductors in Taiwan was another possibility, Huang said.Taiwanese Deputy Foreign Minister Tseng Hou-jen called the Chinese pressure on Lithuania “disproportionate.””The U.S. and EU refer to Taiwan as Taiwan in their official documents, and China keeps quiet,” he said. “China’s action seems to have targeted what it perceives as vulnerable country, for its political gains. But giving in is not the best way in dealing with bullies.” More

NEW YORK (Reuters) – Futures on the federal funds rate on Wednesday have priced in a roughly 80% chance of a quarter-percentage-point rate hike by the Federal Reserve at the March meeting following the release of the U.S. central bank’s minutes of its last policy meeting.For the year, rate futures are implying about three rate increases in 2022.Fed officials said last month the U.S. labor market was “very tight” and might need the Fed to raise interest rates sooner than expected but also reduce its overall asset holdings to tame high inflation, according to minutes of the central bank’s Dec. 14-15 policy meeting. Some participants also noted that it could be appropriate to begin reducing the size of the Fed’s balance sheet relatively soon after beginning to raise the fed funds rate. The size of the Fed’s balance sheet is estimated at $8.5 trillion.”The tone of the minutes suggested that they’re going to start earlier and could extend the tightening. They are very afraid of inflation getting out of hand,” said Kim Rupert, managing director, fixed income, at Action Economics.”Looking to shrink the balance sheet more quickly than we thought, that might limit the extent of rate hikes and I think the Fed even sort of mentioned that.”After the Fed’s mid-December meeting, rate futures had fully priced in the first hike by May this year.U.S. yields surged and the curve flattened after the Fed minutes as investors braced for what could be multiple hikes that should push short-term rates higher. [US/] Some analysts viewed prospects of a March rate hike though as too aggressive given the likely moderation in growth amid the surge in COVID-19 cases and possible easing of inflation.”March is definitely aggressive, but the market is ahead of the Fed. I would say it’s more May or June,” said Ellis Phifer, managing director, fixed income research at Raymond James.”If you get data showing pricing pressures and delivery times are easing, I would imagine that would push rate hikes back a little bit…I think we are near peak inflation for the year. More

(Reuters) -The Federal Reserve on Wednesday named leadership for the boards of its 12 regional Fed banks that is both majority female and majority people of color.”In recent years, the Federal Reserve System has worked to increase the overall diversity of the Reserve Bank and branch boards of directors and continues to build on those efforts,” the Fed said in a statement announcing the appointments, which the Washington-based Board makes annually.Of the 24 people named to chair and vice chair posts at the 12 regional banks for the coming year 13 are women and 13 are people who identify as Black, Hispanic, or otherwise non-white, according to a Reuters tally. Last year the group also included 13 women, but just 10 people of color.The shift comes amid a broader remaking of the Fed bank boards that, over the last several years, has increasingly begun to look like America https://www.reuters.com/article/us-usa-fed-diversity-analysis-idUKKBN2B1187. To be clear, Fed bank boards do not set interest rates or write monetary policy. That’s the job of the Fed Board in Washington and the presidents of the 12 Fed banks. At the Board, all current six members are white, and just two are women, though U.S. President Joe Biden is currently considering nominations that would dramatically shift that makeup. At the 12 Fed banks, half of current presidents and acting presidents are white men. But the role of the Fed bank boards of directors is important: They share their experiences of the real economy with policymakers, indirectly shaping policymaker views, and they also pick new presidents, a process currently underway at two Fed banks. More

WASHINGTON (Reuters) – A “very tight” job market and unabated inflation might require the Federal Reserve to raise interest rates sooner than expected and begin reducing its overall asset holdings as a second brake on the economy, U.S. central bank policymakers said in their meeting last month.In a document released on Wednesday that markets took as decidedly hawkish, the minutes from the Dec. 14-15 policy meeting showed Fed officials uniformly concerned about the pace of price increases that promised to persist, alongside global supply bottlenecks “well into” 2022.Those concerns, at least as of mid-December, even appeared to outweigh the risks potentially posed by the fast-surging Omicron variant of the coronavirus, seen by some Fed officials as likely adding further to inflation pressures but not “fundamentally altering the path of economic recovery in the United States.” “Participants generally noted that, given their individual outlooks for the economy, the labor market, and inflation, it may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated. Some participants also noted that it could be appropriate to begin to reduce the size of the Federal Reserve’s balance sheet relatively soon after beginning to raise the federal funds rate,” the minutes stated.The language showed the depth of the consensus that has emerged at the Fed in recent weeks over the need to move against high inflation – not just by raising borrowing costs but by acting with a second lever and reducing the central bank’s holdings of Treasury bonds and mortgage-backed securities. The Fed has about $8.8 trillion on its balance sheet, much of it accumulated during the coronavirus pandemic to keep financial markets stable and hold down long-term interest rates.Markets swiftly took note.The probability that the Fed would lift interest rates in March for the first time since the pandemic’s onset rose to greater than 70%, as tracked by CME Group’s (NASDAQ:CME) FedWatch tool. That, plus the prospect of the Fed reducing its presence in long-term bond markets, pushed the U.S. 10-year Treasury yield to its strongest level since April 2021.U.S. stocks tumbled, with the S&P 500 index down about 1.6%, as the readout of last month’s meeting showed perhaps even more conviction than investors had expected among Fed policymakers to tackle inflation. The yield on the 2-year Treasury note, the maturity most sensitive to Fed policy expectations, shot to its highest level since March 2020 when the pandemic-fueled economic crisis was unfolding.”This is news. This is more hawkish than expected,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York.MAXIMUM EMPLOYMENTThe minutes offered more details on the Fed’s abrupt shift in policy last month, taken to counter inflation running at more than twice the central bank’s 2% target.Along with outlining their inflation concerns, officials said that even with the U.S. labor market more than 3 million jobs short of its pre-pandemic peak, the economy was closing in fast on what might be considered maximum employment, given the retirements and other departures from the job market that have been prompted by the health crisis.”Participants pointed to a number of signs that the U.S. labor market was very tight, including near-record rates of quits and job vacancies, as well as a notable pickup in wage growth,” the minutes said. “Many participants judged that, if the current pace of improvement continued, labor markets would fast approach maximum employment.”Policymakers in December agreed to hasten the end of their pandemic-era program of bond purchases, and issued forecasts anticipating three quarter-percentage-point rate increases during 2022. The Fed’s benchmark overnight interest rate is currently set near zero.The December meeting was held as coronavirus case counts had begun to climb due to the spread of the Omicron variant. Infections have exploded since then, and there has been no commentary from senior Fed officials yet to indicate whether the changing health situation has altered their views about appropriate monetary policy.Fed Chair Jerome Powell will appear before the Senate Banking Committee next week for a hearing on his nomination for a second four-year term as head of the central bank, and is likely to update his views about the economy at that time. More

Hong Kong is to ban passenger flights from eight countries including the US, UK and Australia as part of a range of measures to tackle the spread of the Omicron variant of coronavirus.Theme parks and gyms have been ordered to shut and evening dine-in at restaurants prohibited.The Chinese territory, which has adopted a “zero-Covid” approach with some of the world’s strictest quarantine restrictions, has been seeking to keep the virus at bay following the emergence of the city’s first Omicron cluster.Carrie Lam, Hong Kong’s chief executive, said on Wednesday that passenger flights from the US, UK, Australia, Canada, France, India, Pakistan and the Philippines will be banned for two weeks from Saturday.Do you think the “zero-Covid” approach is the correct way forward? Or do we have to learn to live with the virus? Tell me what you think at [email protected]. Thanks for reading FirstFT Asia. — Emily Five more stories in the news1. Fed indicates faster rate rises are possible The Federal Reserve may need to raise interest rates “sooner or at a faster pace” than officials initially anticipated, as it seeks to tame uncomfortably high inflation and foster a stable economic recovery, according to minutes from its latest meeting. 2. Kazakhstan asks for Russian aid to control protests Kazakhstan’s president appealed to a Russian-led military alliance for help yesterday after vowing to act with force to curb protests that have swept the resource-rich central Asian nation owing to anger over rising fuel prices. A state of emergency was declared after buildings were set alight and demonstrators overran an airport.

Smoke rises from a Kazakhstan government building during a protest in Almaty on Wednesday © AP

3. Taiwan to support Lithuania after dispute with China Taiwan is setting up a $200m fund to invest in Lithuania and is aiming to take as many of the Baltic country’s goods banned by China as possible, as Taipei tries to reward Vilnius for its diplomatic support.4. North Korea grows nuclear weapons, evading sanctions Pyongyang has exploited “non-financial” businesses and professions, including precious metals dealers and a casino to undermine international sanctions, a new report has revealed. Yesterday, it fired a suspected ballistic missile towards the Sea of Japan, according to the South Korean and Japanese governments.5. Evergrande launches bid to delay payments The property developer will hold an online meeting with renminbi-denominated bondholders this week as the heavily indebted Chinese developer seeks to delay more repayment deadlines and battles to complete its real estate projects. Coronavirus digestInvestors are dumping shares in many tech companies that surged during the pandemic, instead moving to equities linked to the economic recovery.Tennis star Novak Djokovic was refused entry into Australia following a 12-hour standoff with government officials at a Melbourne Airport over questions regarding his medical exemption from a coronavirus vaccine. (NYT) Boris Johnson announced a shake-up of the Covid-19 testing regime, which scraps pre-departure Covid-19 tests for people travelling to England.Emmanuel Macron has come under fire in France for saying he wanted to “piss off” the unvaccinated by depriving them of social activities to pressure them to get jabbed.On Thursday, he was told he would need to leave the country, following a 12-hour standoff with government officials at a Melbourne AirportOpinion: To live with Covid, governments should adopt rehearsed emergency regimes that the public and business understand, writes Martin Sandbu.The day aheadSydney Festival begins The arts and cultural festival is set to kick off today. More than 20 acts have announced they will boycott the event over a sponsorship deal with the Israeli embassy. (The Guardian) Anniversary of US Capitol riot President Joe Biden is expected to speak at the US Capitol to mark the anniversary of the deadly assault by a mob supporting then-president Donald Trump. A year on, many Capitol Police officers continue to suffer from the physical and emotional impact of the attack. (FT, NYT) PMI figures IHS Markit’s service sector Purchasing Managers’ Index for Japan, Australia and China are set to be released. What else we’re readingChina’s business crackdown threatens growth and innovation The speed and ferocity of Beijing’s actions against private companies has caught both domestic and foreign observers by surprise. It is estimated that the crackdown has wiped out more than $1tn from the market value of Chinese companies.Investors gear up for ‘gold rush’ in metaverse hardware The metaverse — a catch-all term for the theory that people will spend ever greater proportions of their lives in ever more immersive virtual worlds — may lack an exact definition. But the parameters are clear enough to forecast the types companies that stand to benefit.The battle to implement a historic global tax deal Turning the political agreement into legally binding commitments may prove a long and hard slog. And ironically the US, a main instigator of the deal, could in effect kill it owing to the polarised politics that so often block domestic legislation.Online streaming looks to Asia for steady flow of subscribers Emerging markets have billions of customers hungry for content, according to data from Omdia, a technology consultancy. There are, however, a variety of obstacles to turning that demand into rising revenues.Hello, universe. Is there anyone out there? In the future, we may look back at our times and ask the question: was it really such a good idea to contact aliens? John Thornhill argues that astronomers should first consider whether they have the right to contact extraterrestrial life forms.Travel From the grand former War Office building in Whitehall to a Rwandan island retreat, here are the biggest hotel openings of 2022.

Accommodation at Sextantio Rwanda is in beehive-like thatched huts More

WASHINGTON (Reuters) – As Democrats struggled to move forward on broad new voting rights legislation, the U.S. Senate’s top Republican signaled interest on Wednesday in changing an 1887 law that allows members of Congress to dispute presidential election results.Senate Minority Leader Mitch McConnell opened the door to altering the Electoral Count Act, a day before the anniversary of the Jan. 6 Capitol riot, in which supporters of former President Donald Trump stormed the halls of Congress trying to overturn his election defeat. “I think it’s worth discussing,” McConnell told reporters, when asked about his potential interest in changes to the 19th century law. The taciturn Kentucky Republican did not elaborate.Republican openness to that could counter a drive by Democrats to pass two sweeping voting rights bills by Jan. 17, the federal holiday honoring civil rights leader Martin Luther King Jr., in response to voting restrictions imposed in Republican-run states after Trump’s false claim that the 2020 election was stolen from him.The Democratic bills would require at least 15 days of early voting, allow late registration, make Election Day a holiday, combat the partisan gerrymandering of congressional districts and impose other changes on state-run elections. But the legislation, which faces overwhelming Republican opposition, can pass only if all 50 lawmakers in the Democratic caucus agree to alter Senate rules, which impose a 60-vote threshold on most bills in the 100-seat chamber. At least one Democrat, Senator Joe Manchin https://www.reuters.com/world/us/senators-meeting-with-manchin-voting-rights-bills-schumer-2022-01-04, has said he would prefer that Democrats not change the rules on their own.McConnell’s comment drew immediate criticism from Democrats.”Putting that forward at a time like this as a standalone is a distraction. It is a cynical political maneuver by people who are trying to rig the elections in the country,” said Senator Raphael Warnock, who faces reelection in Georgia this year.Senate Majority Leader Chuck Schumer had also dismissed the idea on Tuesday, telling reporters: “That makes no sense.” Bipartisan support for reform of the Electoral Count Act could allow Congress to alter procedures by which members of Congress can contest the results of presidential and vice presidential elections. A number of Trump’s congressional allies challenged the 2020 results on Jan. 6, while the former president falsely told supporters at a rally near the White House that he had lost reelection because of massive voter fraud.Trump’s speech and the ensuing attack on the Capitol led to his second impeachment and subsequent acquittal after a Senate trial. But he continues to repeat the falsehoods, as the country heads toward congressional elections in November and the next presidential election in 2024. More