The US Federal Reserve is more concerned about deflation than inflation, Wendy Edelberg, a Fed economist, said yesterday at a conference in Beijing. She added that this was her own opinion.
The Fed is “very worried about real interest rates being too high,” she told the Global Think Tanks Summit. The monetary authority “would be thrilled if right now the worry that it had was really inflation, and if it were really worried about seeing signs that the economy was about to be growing much faster than its potential growth rate.”
The Fed refrained on June 25 from lifting its target rate for overnight loans between banks, having kept it at zero to 0.25 percent since Dec. 16. It also kept unchanged the size of its asset-purchase programs after more than doubling the assets on its balance sheet to US$2.1 trillion during the past year, expanding bank reserves and beginning lending programs to bolster the financial system.
The Fed’s balance sheet is already starting to come down as those lending facilities are no longer as “attractive,” Edelberg also said, attempting to ease worries about the Fed’s “‘exit strategy” for its fiscal and monetary stimulus measures. The US economy is still “grim” even if there are stabilizing signs in other economies around the world, she said.
US Treasuries fell this year as the global financial crisis abated and the US government began selling a record amount of debt to fund stimulus spending and bank rescues. The yield on the 10-year note rose in the past two months 35 basis points, or 0.35 percentage point, to 3.5 percent yesterday, according to data compiled by Bloomberg.
Risk premiums, rather than inflationary concerns, have caused recent gains in long-term interest rates, Edelberg said.
“Investors are rediscovering their appetite for risk and they are getting out of Treasuries into other kinds of investments,” she said.
Semiconductor shares in China surged yesterday after Reuters reported the US had ordered chipmaking giant Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to halt shipments of advanced chips to Chinese customers, which investors believe could accelerate Beijing’s self-reliance efforts. TSMC yesterday started to suspend shipments of certain sophisticated chips to some Chinese clients after receiving a letter from the US Department of Commerce imposing export restrictions on those products, Reuters reported on Sunday, citing an unnamed source. The US imposed export restrictions on TSMC’s 7-nanometer or more advanced designs, Reuters reported. Investors figured that would encourage authorities to support China’s industry and bought shares
FLEXIBLE: Taiwan can develop its own ground station equipment, and has highly competitive manufacturers and suppliers with diversified production, the MOEA said The Ministry of Economic Affairs (MOEA) yesterday disputed reports that suppliers to US-based Space Exploration Technologies Corp (SpaceX) had been asked to move production out of Taiwan. Reuters had reported on Tuesday last week that Elon Musk-owned SpaceX had asked their manufacturers to produce outside of Taiwan given geopolitical risks and that at least one Taiwanese supplier had been pushed to relocate production to Vietnam. SpaceX’s requests place a renewed focus on the contentious relationship Musk has had with Taiwan, especially after he said last year that Taiwan is an “integral part” of China, sparking sharp criticism from Taiwanese authorities. The ministry said
US President Joe Biden’s administration is racing to complete CHIPS and Science Act agreements with companies such as Intel Corp and Samsung Electronics Co, aiming to shore up one of its signature initiatives before US president-elect Donald Trump enters the White House. The US Department of Commerce has allocated more than 90 percent of the US$39 billion in grants under the act, a landmark law enacted in 2022 designed to rebuild the domestic chip industry. However, the agency has only announced one binding agreement so far. The next two months would prove critical for more than 20 companies still in the process
CHANGING JAPAN: Nvidia-powered AI services over cellular networks ‘will result in an artificial intelligence grid that runs across Japan,’ Nvidia’s Jensen Huang said Softbank Group Corp would be the first to build a supercomputer with chips using Nvidia Corp’s new Blackwell design, a demonstration of the Japanese company’s ambitions to catch up on artificial intelligence (AI). The group’s telecom unit, Softbank Corp, plans to build Japan’s most powerful AI supercomputer to support local services, it said. That computer would be based on Nvidia’s DGX B200 product, which combines computer processors with so-called AI accelerator chips. A follow-up effort will feature Grace Blackwell, a more advanced version, the company said. The announcement indicates that Softbank Group, which until early 2019 owned 4.9 percent of Nvidia, has secured a
RSS