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Fed cautious about inflation and Trump’s policies
At their meeting in December, the U.S Federal Reserve officials expressed concern that inflation would remain stubbornly above the central bank’s 2 percent target and about the potential impact of U.S. President-elect Donald Trump’s policies. As a result, officials would move forward with rate cuts more slowly, according to minutes released Wednesday.

US stocks shook off inflation worries
US stocks posted a small gain on Wednesday, although the Yield on 10-year government bonds reached its highest level since April following the release of Fed minutes. Asia-Pacific markets traded mostly lower on Thursday. Australia S&P/ASX 200 closed 0.24% lower as data showed the country’s retail sales rose less than expected in November.

Asian central banks are faced with a strong US dollar
Asian currencies such as the Chinese yuan, Japanese yen and Korean won have fallen against the U.S. dollar since Trump won the presidential election in November. That poses a conundrum for Asia’s central banks: A weaker currency would boost exports but could increase imported inflation, complicating banks’ ability to manage domestic economic policy.

Deflation fears in China
China’s consumer price inflation rose 0.1% in December from a year earlier, data from the National Bureau of Statistics showed on Thursday. On a monthly basis, China’s consumer price index remained unchanged, compared with a 0.6% decline in November. Continued low consumer inflation in China suggests China is grappling with weak domestic demand, fueling deflation fears.

Dispute over quantum computing
Nvidia CEO Jensen Huang said Tuesday that it could take 15 to 30 years for “very useful quantum computers” to come to market, sending quantum computer stocks plummeting on Wednesday. Alan Baratz, CEO of D-wave quantumwhose shares plunged more than 30%, said Huang is “completely wrong” — “we at D-Wave are commercial today,” Baratz told CNBC.

(PRO) Keep an eye out for this Taiwanese chip supplier, says Bernstein
At CES, Nvidia announced a desktop supercomputer aimed at AI researchers and data scientists. The computer will feature Nvidia’s Grace Blackwell superchip, which Nvidia will produce in collaboration with a Taiwanese chip supplier. The supplier will reap significant financial benefits from the partnership from 2026, says Bernstein.

On paper, the minutes from the Fed’s December meeting spelled bad news for investors. Officials were concerned about inflation and the impact of Trump’s stated policies (although Trump was not specifically named).

“Almost all participants believed that upside risks to the inflation outlook had increased,” the minutes said. “Participants noted recent stronger-than-expected readings on inflation and the likely impact of possible changes in trade and immigration policies.”

As a result, Fed officials expect the pace of rate cuts to slow in the future.

Upside risks to inflation, problematic economic policies and fewer than expected interest rate cuts: It’s a strong and bitter brew for investors to swallow. The yield on the 10-year Treasury note hit 4.730% in intraday trading, its highest level since April.

But stocks largely ignored that warning and rallied on Wednesday. The S&P 500 0.16% added and the Dow Jones Industrial Average rose 0.25%. The Nasdaq Composite fell 0.06% – tech stocks like Palantir, Advanced micro devices And Microstrategy had a rough day – but that’s still near zero and not a steep decline.

Investors had apparently already priced in inflation warnings – the Fed’s latest dot plot, which predicted only two quarter-point interest rate cuts in 2025, had already shaken markets when it was published in December.

Fed Governor Christopher Waller also provided some relief for investors. Speaking in Paris, he said that the persistence of inflation recently had been driven largely by “imputed” prices such as housing services, while “observed” prices for other goods and services showed disinflation.

Waller added that if he believes economic conditions develop, he would “support further reductions in our key interest rate in 2025.”

What is not priced in as much is the US jobs report for December, which is expected on Friday. This could be the next catalyst for the markets.

— CNBC’s Jeff Cox, Sean Conlon and Pia Singh contributed to this report.