U.S. Government Shutdown Nears Record, Central Bank Officials Make Cautious Remarks

Goldman Sachs Group Inc. and Bank of America Corp. see little immediate risk of currency intervention in Japan, saying the usual triggers "have not yet been met" even as the yen approaches the closely watched 155-per-dollar level.

The yen "does not appear to be at particularly weak levels," Goldman strategist Karen Reichgott Fishman wrote in a note dated Monday. Recent underperformance has been driven largely by a repricing of Japan's fiscal risk premium and near-term Bank of Japan rate expectations, she said.

That view is echoed by BofA's Shusuke Yamada, who said dollar-yen above 155 is "unlikely to trigger imminent intervention in absence of excessive volatility or a build-up in speculative positioning."

The yen slid about 4% against the dollar in October, making it the worst performer among G-10 currencies. The selloff came as markets digested Prime Minister Sanae Takaichi's perceived tilt toward fiscal expansion and dovish monetary policy. The currency weakened further after BOJ held rates steady last week with Governor Kazuo Ueda offering little guidance on future hikes, saying the central bank wasn't at risk of falling behind the curve. It slipped further on Tuesday to 154.48 per dollar after Takaichi said she aims to boost tax revenue without hiking tax rates.

The currency depreciation has triggered verbal intervention from officials. Finance Minister Satsuki Katayama said Friday that authorities are monitoring currency movements, including those driven by speculation, with a high sense of urgency.

Japan's Ministry of Finance last intervened in the forex market in 2024, stepping in at levels around 157.99, 159.45, 160.17 and 161.76 per dollar. Authorities have stayed on the sidelines for over a year.

Goldman estimated the finance ministry has about $270 billion of available funds for intervention before having to sell longer-term securities, giving it the capacity to match the sizes of the most recent interventions in 2022 and 2024. Intervention risk would rise when dollar-yen reaches the 161-162 level, it said.

Without a sharp rise in speculative positioning or volatility, dollar-yen "could test the 158 level before triggering a meaningful policy response," BofA's Yamada wrote in a note on Monday. He maintained his year-end forecast of 155, while adding "the risk of an overshoot to 160 in 4Q25 has risen."

Looking further out, Goldman expects the yen to appreciate gradually as hedging costs fall and the dollar weakens. That move could accelerate if US labor market data deteriorate. However, greater-than-expected fiscal stimulus in Japan — particularly if seen as limiting the BOJ's ability to tighten — or renewed US economic outperformance could undermine that view.

Source: Bloomberg Europe

Tech Outperforms as Amazon and OpenAI Deal Signals AI Infrastructure Surge

Palantir Beats on Earnings but Shares Retreat

European Markets Hold Flat as Warning Signs Emerge

Source: CNBC

Asian Markets Show Caution as Wall Street Surges on AI Momentum

Regional Indices Reflect Split Sentiment

Wall Street Rally Driven by AI Deal and Chip Optimism

Asian Markets Track Their Own Path as Global AI Narrative Grows

Source: CNBC

Subsidized Energy Marks Strategic Pivot in China’s AI Development

Policy Response to Semiconductor Squeeze

Local Governments Take the Lead in AI Infrastructure Support

Implications for Domestic and Global Tech Competition

Source: Reuters

South Korea's consumer inflation quickened in October as a weaker won lifted energy and food costs, reinforcing the case for the central bank to extend the pause in its monetary easing cycle as it seeks to cool a housing market rally.

Consumer prices advanced 2.4% from a year earlier, accelerating from a 2.1% gain in September, the Ministry of Data and Statistics said Tuesday. The pace, which exceeded the median forecast of 2.2% in a Bloomberg survey of economists, was the fastest since July 2024, when prices jumped by 2.6%.

Core inflation, which strips out volatile food and energy items, picked up to a 2.2% clip from 2% in September, the data showed. Both headline and core gauges are now hovering above the Bank of Korea's 2% target.

The latest inflation reading comes at a delicate time for the BOK, which has held its key rate steady for the past three meetings. While price pressures have eased in recent months, concerns over asset bubbles and financial stability risks linked to household debt have kept policymakers from resuming the rate-cutting cycle that began in October last year.

That limits the central bank's options as it gauges the potential impact from 15% US tariffs on South Korean goods. The BOK estimates the measures will shave 0.45 percentage point off growth this year and 0.6 point in 2026.

The uptick in October inflation was largely driven by a nearly 1.9% slide in the won against the dollar last month, pushing up import prices for energy and food. The currency fell to its weakest level since March. The won is the second-weakest performing Asian currency versus the dollar since Oct. 1.

Fuel costs also climbed after the government partially rolled back fuel tax subsidies in October, adding to upward pressure on gasoline prices. Meanwhile, apartment prices in Seoul extended their streak of gains for a 39th straight week as of Oct. 27, according to the Korea Real Estate Board.

Food and non-alcoholic beverage prices climbed 3.5% in October from a year earlier, while housing and utilities costs rose 1.2%. Prices for food and lodging gained 3.2% and transportation costs also increased 3.4%.

Economists are divided over whether the BOK will lower rates at its final policy meeting of the year on Nov. 27 as policymakers weigh whether housing prices in the capital region have stabilized.

The inflation data come on the heels of stronger-than-expected growth for the third quarter, supported by resilient exports and domestic spending. Gross Domestic Product expanded 1.2% from the previous quarter, beating the estimate of 1% growth.

Private consumption rose 1.3%, fueled by two rounds of cash handouts under the government's extra budget of more than $20 billion, with spending on both goods and services increasing, the central bank said last week.

Source: Bloomberg Europe

FILE - A costumer exits a Starbucks store in Oakland, Calif., Thursday, Jan. 16, 2025.

Starbucks said Monday it is forming a joint venture with Chinese investment firm Boyu Capital to operate Starbucks stores in China.

Under the agreement, Boyu will pay $4 billion to acquire a 60% interest in Starbucks' retail operations in China. Starbucks will retain a 40% interest in the joint venture and will own and license the Starbucks brand.

Starbucks entered China almost 30 years ago, and has been credited with growing coffee culture in the country. China is Starbucks' second-largest market outside the U.S., with 8,000 locations.

But in recent years, the Seattle coffee giant has struggled in China with cheap, fast-growing Chinese startups like Luckin Coffee.

As a result, Starbucks has been looking for a partner to help it grow its business in China, particularly in smaller cities. In July, Starbucks Chairman and CEO Brian Niccol said the company was evaluating around 20 offers for a stake in the company.

Source: Yahoo Finance