By Jamie McGeever

(Reuters) – A look at the day ahead in Asian markets. 

Investors hoping that Nvidia (NASDAQ:NVDA)’s eagerly-awaited earnings after the U.S. close on Wednesday would inject renewed vigor into world markets will be disappointed, heralding the prospect of a lukewarm open in Asia on Thursday.

Wall Street spent all day Wednesday firmly in the red before a late rally, bond yields and the dollar were higher, and a weak 20-year U.S. Treasury bond auction was a reminder of how deep Washington’s fiscal deficit runs and the strain on investors to fund it. 

The global picture wasn’t particularly reassuring either. European stocks fell for a fourth day – their worst run in over two months – China’s yuan slipped to a three and a half month low on the spot market, and volatility ticked higher.

Then came Nvidia. The world’s most valuable company reported a beat on third-quarter earnings per share and forecast fourth-quarter revenue slightly above estimates. But shares immediately fell in after-hours trading by as much as 5% before recovering, and Nikkei and Wall Street futures are pointing to a lower open in Japan and the US on Thursday.

Is the AI darling’s shine beginning to fade?

Thursday’s economic calendar in Asia is relatively light, with South Korean export, Indonesian current account and Hong Kong inflation data the main releases. 

Annual inflation in Hong Kong is seen slowing to a 1.7% pace in October from 2.2% in September, which would mark the steepest decline since April and heighten concern that deflationary pressures on the Chinese mainland could be spreading.

There may be more market fireworks from Bank of Japan governor Kazuo Ueda, who is scheduled to speak at a financial forum in Paris. Investors and traders will be trying to determine if his tone and signals differ from his fairly balanced remarks earlier this week that kept the door open to a December rate hike but also cautioned against moving too fast.

Judging by the yen’s behavior recently, whatever markets think the BOJ will do is being completely overwhelmed by renewed hawkishness surrounding the Fed outlook.

The yen has only appreciated in one out of the last eight trading sessions, and finds itself back below 155.00 per dollar. It might need a notably hawkish signal from Ueda to engineer a sustainable recovery or get September’s 140.00 per dollar back into view.

But right now, the Japanese swaps market is pointing to less than 50 bps of BOJ tightening by the end of next year. 

Meanwhile, Bitcoin is moving closer to a historic break above $100,000, boosted by increasing confidence that President Donald Trump’s administration will be a crypto-friendly regime.

Here are key developments that could provide more direction to markets on Thursday:

– Bank of Japan Governor Kazuo Ueda speaks in Paris

– Hong Kong inflation (October)

– South Korea exports (October)

NEW YORK (Reuters) -Gautam Adani, the chair of Indian conglomerate Adani Group and one of the world’s richest people, has been indicted in New York over an alleged multibillion-dollar fraud scheme, U.S. prosecutors said on Wednesday.

Authorities charged Adani and two other executives at Adani Green Energy (NS:ADNA), his nephew Sagar Adani and Vneet Jaain, with agreeing between 2020 and 2024 to pay more than $250 million in bribes to Indian government officials to obtain solar energy supply contracts expected to yield $2 billion in profits.

Prosecutors said the renewable energy company also raised more than $3 billion in loans and bonds during this period on the basis of false and misleading statements.

Five other people were hit with related criminal conspiracy charges, including two executives of another renewable energy company, and three employees of a Canadian institutional investor.

Adani Group did not immediately respond to requests for comment outside business hours in India, where the charges were announced early Thursday morning.

India’s embassy in Washington did not immediately respond to a request for comment.

According to court records, a judge has issued arrest warrants for Gautam Adani and Sagar Adani, and prosecutors plan to hand those warrants to foreign law enforcement.

Seven of the eight defendants are Indian citizens and lived in India, while the eighth, Cyril Cabanes, is a dual French-Australian citizen who lived in Singapore, prosecutors said.

The U.S. Securities and Exchange Commission filed related civil charges against Gautam Adani, Sagar Adani and Cabanes, 50, an executive at Azure Power Global (OTC:AZREF). Prosecutors identified Cabanes as one of the Canadian investor’s employees.

Gautam Adani is worth $69.8 billion, according to Forbes magazine, making him the world’s 22nd richest person.

By Simon Lewis (JO:LEWJ) and Daphne Psaledakis

WASHINGTON (Reuters) – The Biden administration has moved to forgive about $4.7 billion in U.S. loans to Ukraine, State Department spokesperson Matthew Miller said on Wednesday, as outgoing officials seek to do what they can before leaving office to bolster Ukraine in its war against Russia.

A funding bill passed by the U.S. Congress in April included just over $9.4 billion of forgivable loans for economic and budgetary support to Ukraine’s government, half of which the president could cancel after Nov. 15. The bill appropriated a total of $61 billion to help Ukraine fight the full-scale invasion Moscow launched in February 2022.

“We have taken the step that was outlined in the law to cancel those loans,” Miller told a press briefing, adding that the step was taken in recent days.

Congress could still block the move, Miller said.

The Senate is due to vote later on Wednesday on a motion of disapproval of loan forgiveness for Ukraine put forward by Republican Senator Rand Paul, a frequent critic of U.S. support for Ukraine. The majority of senators from both parties support aid to Ukraine.

President Joe Biden has ordered officials to rush as much aid to Ukraine as possible before he leaves office on Jan. 20 amid concerns President-elect Donald Trump could limit U.S. support.

By Ann Saphir

(Reuters) – Federal Reserve Governor Michelle Bowman on Wednesday expressed discomfort with the U.S. central bank cutting interest rates while inflation continues to run above the Fed’s 2% goal, adding a bit more color to her call for a cautious approach to further rate reductions. 

“It’s concerning to me that we’re recalibrating policy, but we haven’t yet achieved our inflation goal,” Bowman said at an event in West Palm Beach, Florida.

The remark came in answer to one of several audience questions, a couple of which drew unusually personal responses from the generally reserved policymaker.

Asked about the effect of changes to immigration policy on inflation and low-wage labor, Bowman urged a patient and cautious approach.

Noting that her family’s bank in Kansas primarily serves ranchers and farmers, she said it’s very difficult to find people to work in agricultural jobs. “We need people to work across this country and we need policies that will facilitate that,” she said.

President-elect Donald Trump, who nominated Bowman to her job six years ago during his first term, has promised to crack down on immigration and deport migrants after he takes office in January.

Bowman, whose father was in the Air Force, teared up as she responded to a question about how growing up in a military family had shaped her leadership style, saying flexibility is key to coping with frequent childhood household moves.

Flexibility is a frequent theme in Bowman’s public remarks, and Wednesday was no different, as she emphasized the importance of optionality on rate decisions and the need to tailor banking regulation to size so that smaller community banks are not overburdened.

By Matt Tracy

WASHINGTON (Reuters) – Asset manager PineBridge Investments said in a report that it is seeing the start of a rare non-recessionary interest rate-cutting cycle that should support performance of fixed income assets like leveraged finance.

President Donald Trump’s election victory and Republicans’ takeover of the House of Representatives and the Senate will add to pro-growth policies and further support risk assets from a fundamental perspective, while introducing potential headwinds outside the U.S. and more restrictive trade policies, the report issued on Tuesday said.

Stimulative fiscal policies will add to near-term inflationary pressures, resulting in a less accommodative Federal Reserve and yield curves remaining at recently elevated levels.

In contrast, a weaker economic outlook for Europe would allow the ECB to cut rates at a steady pace, which should bolster a stronger U.S. dollar, the report said.

Tight valuations, reflected in record tight corporate credit spreads, would, however, offset positive fundamentals.

“We thus see a benefit in being ‘centrist” and balanced in portfolio risk positioning,” said the report authored by Pinebridge’s Steven Oh, global head of credit and fixed income.

Leveraged credits are likely to benefit as interest rates were being cut when economic growth, while slowing, was firm. Low unemployment and a soft landing (or no landing) is highly likely or may have already occurred, the note said.

Despite its overall bullishness for U.S. fixed income investments, PineBridge said it was selective across industries and issuers given market uncertainties, ongoing U.S. budget issues, the expected introduction of new trade tariffs and ongoing conflicts in the Middle East, and the war between Russia and Ukraine.

The asset manager suggested investors seek opportunities to create dry powder without sacrificing yield like buying AA-rated collateralized loan obligations or CLOs, which can provide yield comparable to riskier BB-rated high-yield bonds.

The asset manager with over $200 billion of assets under management was also constructive on mortgage-backed securities and suggested emerging market assets for diversity.

“We view such ‘yield-equivalent dry powder’ as a critical element in fixed income positioning in 2025,” the note said.

(Reuters) – Goldman Sachs CEO David Solomon expects capital markets to be more robust in 2025, he said in an interview with CNBC on Wednesday, joining a wave of positive forecasts as inflation eases and a new administration prepares to take office.

Solomon said there was a belief that the Trump administration will pare back the level of regulation, and markets were responding to the idea that the new government would be pro-growth.

Several business executives and investors have forecast an uptick in corporate dealmaking in 2025 on expectations that President-elect Trump would adopt a gentler approach toward mergers than his predecessor.

Markets may also benefit from improving investor sentiment as the Federal Reserve potentially cuts interest rates further.

However, Fed Governor Michelle Bowman called for a cautious approach to any further interest-rate cuts, saying that inflation remains a concern and the labor market is strong.

By David Milliken

LONDON (Reuters) -British inflation is at least as likely to undershoot the Bank of England’s latest forecasts as it is to match them, potentially requiring faster rate cuts, Deputy Governor Dave Ramsden said on Wednesday.

Ramsden voted for the BoE to start cutting rates in May – three months before a majority on the Monetary Policy Committee backed loosening policy – and joined the majority earlier this month who backed a second quarter-point rate cut to 4.75%.

After its latest rate cut, the BoE said future loosening would be gradual and forecast inflation would stay above its 2% target until early 2027, partly because of stimulus in the new Labour government’s first budget and a higher minimum wage.

Ramsden said such an outcome was “plausible” but that he put at least as much weight on a scenario under which inflation fell faster “consistent with more symmetry in wages and price setting, with less domestic inflationary pressure”.

A BoE survey of employers showed they were finding recruitment easier than at any time since 2017, while official data showed the fewest job vacancies relative to the level of unemployment since before the COVID-19 pandemic, Ramsden said.

Employers next year are likely to raise annual pay settlements by an amount in the bottom half of a 2-4% range which they had reported to BoE staff, he predicted.

“This would imply a scenario in which inflation stays closer to the 2% target throughout the first part of the forecast and falls below 2% more materially later on, lower than in the MPC’s published forecasts,” he said in a lecture to students at the University of Leeds.

Slightly higher than expected inflation data for October, released earlier on Wednesday, did not change his outlook, Ramsden said during a question and answer session afterwards.

BUDGET IMPACT

However, he said significant uncertainties around the impact of higher taxes on employers in the latest budget as well as persistent measurement problems in official labour statistics, did require a “watchful and responsive” approach.

“Were those uncertainties to diminish and the evidence to point more clearly to further disinflationary pressures… then I would consider a less gradual approach to reducing Bank Rate to be warranted,” he added.

The BoE’s central forecasts this month were based on market expectations from before the budget of interest rates falling to 3.75% by late 2025. Markets now only see two or three quarter-point BoE rate cuts next year, less than is forecast for the U.S. Federal Reserve or the European Central Bank.

Investing.com — Federal Reserve governor Michelle Bowman on Wednesday backed a cautious approach to further rate cuts amid expectations the neutral level or end point for rate cuts may be closer than previously expected at time when progress against inflation has stalled in recent months.  

“I would prefer to proceed cautiously in bringing the policy rate down to better assess how far we are from the end point, while recognizing that we have not yet achieved our inflation goal and closely watching the evolution of the labor market,” Bowman said.

Bowman was the lone Fed voting member to voting against a 50 basis point rate cut at the Fed’s December meeting, preferring the central bank to cut by 25bps.

Following the Fed’s first rate cut for this cycle in September, the central bank has suggested that it is on a path toward bringing rates down toward a neutral level – one that neither stimulus nor weighs on economic growth.

But the neutral rate or end point for the Fed’s rate cut cycle could be higher than previously expected, suggesting that the road to rate cuts could be shorter than previously expected.   

“My estimate of the neutral policy rate is much higher than it was before the pandemic, and therefore we may be closer to a neutral policy stance than we currently think,” Bowman added.

Bowman’s caution on rate cuts comes as progress on slowing has appeared to stall in recent months, and now poses greater risks to the Fed’s goal to bring inflation down to 2%. 

“I see greater risks to the price stability side of our mandate, especially while the labor market remains near full employment, but it is also possible that we could see a deterioration in labor market conditions,” Bowman said. 

By Davide Barbuscia

NEW YORK (Reuters) – An optimistic outlook on the U.S. economy is prompting U.S. bond giant PIMCO to favor stocks and some other risk assets, while seeking protection against inflation as the new U.S. government could implement policies that put upward pressure on prices.

The bond-focused asset manager, with $2 trillion in assets, expects interest rate cuts by major central banks to boost both stocks and bonds going forward, with the two asset classes providing diversification by moving in opposite directions.

However, it is also cautious on the trajectory of inflation, partly due to possible fiscal and trade policies under the impending new administration of U.S. President-elect Donald Trump.

“Although restrictive central bank rates have brought inflation levels down close to targets, the long-term fiscal outlook in the U.S. includes continued high deficits, and geopolitical surprises could cause a spike in oil prices or snarl supply chains,” portfolio managers Erin Browne and Emmanuel Sharef said in a note on Wednesday.

“Trade policies, such as tariffs, and deglobalization trends could also pressure inflation higher,” they said.

The Federal Reserve is largely expected to cut interest rates for the third consecutive time at its next rate-setting meeting in December.

At the same time, recent strong economic data as well as expectations of inflationary policies under Trump, such as tariffs and a clamp down on illegal immigration, have prompted traders to trim bets on how deeply the U.S. central bank will be able to ease rates.

PIMCO expects a so-called soft landing for the U.S. economy – a scenario where inflation keeps declining without an economic contraction – but it also favors strategies such as equity options to mitigate geopolitical and monetary policy risks.

It said it is overweight U.S. Treasury Inflation-Protected Securities (TIPS), which remained an “attractively priced hedge” against the risk of rising inflation.

(Reuters) – Federal Reserve Governor Michelle Bowman, among the U.S. central bank’s most hawkish policymakers, on Wednesday called for a cautious approach to any further interest rate cuts, noting that inflation remains a concern and the labor market is strong.

The Fed reduced its policy rate earlier this month by a quarter of a percentage point to the 4.50%-4.75% range, a move that Bowman said she supported because it aligns with her preference for lowering short-term borrowing costs gradually. Bowman had cast a lone dissent on the Fed’s half-percentage-point rate reduction in September.

With inflation still elevated and progress toward the Fed’s 2% goal looking to have stalled, Bowman said in remarks prepared for delivery in West Palm Beach, Florida to the Forum Club of the Palm Beaches, “I would prefer to proceed cautiously in bringing the policy rate down to better assess how far we are from the end point, while recognizing that we have not yet achieved our inflation goal and closely watching the evolution of the labor market.”

Bowman said she believes the neutral policy rate – the level of borrowing costs that neither bolsters nor brakes economic growth – is much higher that it was before the COVID pandemic, “and therefore we may be closer to a neutral policy stance than we currently think.”

Indeed, she added, “we should also not rule out the risk that the policy rate may attain or even fall below its neutral level before we achieve our price stability goal.”

Bowman said she would watch incoming data and meet with a broad range of contacts before the Fed’s Dec. 17-18 meeting to assess the appropriateness of the current policy stance, and signaled that she feels the central bank is under no constraint to deliver another rate cut, as markets currently expect.

“I am pleased that the November post-meeting statement included a flexible, data-dependent approach, providing the (Federal Open Market) Committee with optionality in deciding future policy adjustments,” she said.

The bigger risk for the Fed is to its price stability goal, though deterioration in labor conditions is possible, she said.

(This story has been corrected to show Fed’s half-point rate cut was in September, not November, in paragraph 2)