The recent FOMC meetings share a theme: rates are converging toward what appears to be a landing zone on several fronts, even if only temporarily. The balance sheet is now on freeze (there is a floor set for bank reserves), and the funds rate is now close to where it is looking more normal, or at least close to it. Let’s delve into both.
First, the level of the funds rate and floating rates in general. The 3mth SOFR rate is finally below the 10yr SOFR rate (just this week). Which means, at long last, it’s cheaper to fund floating than to fund fixed. This is with the 10yr SOFR having been under rising pressure in the past weeks, but also as the 3mth SOFR has been tamed by the rate-cutting narrative. It’s the first time since the second half of 2022 (and briefly in January 2025) that the 10yr SOFR rate has been above most floating rates, and that will be copper-fastened as soon as the Fed cuts by 25bp in a bit. For players who have baulked at the idea of swapping to floating on account of negative impact carry, that has now gone away (at least for as long as 10yr SOFR remains elevated).
Second, liquidity conditions. Repo has been trending tight in the past few months, and things reached a point of no return when the effective funds rate began to de-anchor and trek towards the rate on excess reserves (now just 1bp below). The Fed reacted at the previous FOMC meeting by reverse engineering this into a rationale for freezing the balance sheet, where further MBS roll-offs would be matched by T-bills buying. But as we’ve noted, the Fed will ultimately have to re-expand the balance sheet at the same pace as the nominal economy is growing. So, if nominal GDP is growing at 3-5%, bank reserves too should expand at that rate. The Fed has reacted to this reality by implementing flexibility to buy T-bills in excess of the MBS roll-off, to ensure ample reserves.
Reserve management purchases is the term the Fed is using to describe its T-bill buying agenda, as in fact they can go out as far as three years in Treasuries if needed. That’s quite deviant from a pure T- bills buying programme, and bordering in fact on QE. They’ll start with $40bn of buying, and suggest it will wane in later months due to seasonal liquidity circumstances. Good for the front end!
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NEW YORK — Time magazine is set to name its person of the year for 2025 on Thursday.
Among those in the running according to prediction markets is artificial intelligence itself, along with tech CEOs Jensen Huang of Nvidia and Sam Altman of OpenAI. Pope Leo XIV, the first American pope whose election this year followed the death of Pope Francis, is also considered a contender, with President Donald Trump, Israeli Prime Minister Benjamin Netanyahu and New York Mayor-elect Zohran Mamdani topping lists as well.
Trump was named the 2024 person of the year by the magazine after his winning his second bid for the White House, succeeding Taylor Swift, who was the 2023 person of the year.
The magazine’s selection dates from 1927, when its editors have picked the person they say most shaped headlines over the previous 12 months.
Rolls-Royce is one of the first engine manufacturer to verify and publish the environmental footprint of emergency power generators
The entire life cycle of the systems is taken into account – from raw material extraction to end of life
mtu gensets can be operated with sustainable fuels, reducing CO2 emissions by up to 90%
Rolls-Royce has delivered mtu emergency power generators with verified environmental product declarations (EPDs) to a European data center operator for the first time. The company is setting a new standard for transparency and sustainability in the supply of energy to critical infrastructure.
In collaboration with sustainability expert Sphera, Rolls-Royce is one of the first engine manufacturers to develop externally verified EPDs for emergency power generators and publish them in the international EPD system (Environdec). The reports document the entire environmental life cycle of the mtu 16V 4000 DS2500 and 10V 1600 systems – from raw material extraction to production and use, to end-of-life recycling.
“With these environmental product declarations, we set a new industry standard for environmental transparency in the field of energy systems,” said Tobias Ostermaier, President Stationary Power Solutions at Rolls-Royce’s Power Systems division. “This is our response to growing demand from our customers, and we are actively supporting them in reducing their carbon footprint.”
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Hello from Yifan in Silicon Valley, your #techAsia host this week.
I had to leave warm sunny California for cold snowy New York last week to moderate a panel. It has been a while since I experienced New York in winter after relocating to the San Francisco Bay Area to cover technology for Nikkei Asia from NYC.
The trip was a reminder of how great that decision was. In addition to being the centre of the AI revolution, the Bay Area is blessed with mild winter weather that rarely drops below 10C during the day.
But the panel discussion at the Asia Society was worth suffering a New York winter again. The panellists shared some great insights often missed in the discussions here in the US, such as how Southeast Asian countries fit into the global AI race.
At the end of the night, one attendee asked a question that stuck with me: What is the end game of AI?
As we approach the conclusion of 2025, many are trying to create a scoreboard of which countries led the AI race, which companies made the most money from AI (Nvidia, obviously) or which large language models show the most potential. But at the end of the day, what does all that mean to everyday people?
At Nikkei Asia, we’re trying to figure out the answer to that question through our series on how AI is reshaping jobs, supply chains, the environment, education and society at large — and where most of us fit into this fast-moving future.
If you’re curious about the answer like I am, follow Nikkei Asia for our ongoing, deeply reported coverage across the region.
Stop blaming AI for job cuts
You might think jobs typically outsourced to Asia — low skill, low pay and easy to standardise — would be the first to be replaced by AI. After all, Silicon Valley has laid off over a hundred thousand tech workers this year, so why wouldn’t the same thing happen overseas?
The reality is quite different, Nikkei Asia’s Sayan Chakraborty and Yifan Yu report. In many parts of Asia, work tied to training, testing and deploying AI systems is expanding rapidly, meaning that artificial intelligence is actually a boon for job markets in countries like India and the Philippines.
But that raises the inevitable question: How long will this last?
Asia’s boom in AI jobs also comes amid scepticism about how capable the technology really is. Jokes about how AI really stands for “actually Indians” have gone viral on social media platforms like Reddit and Blind, while start-ups Builder.ai and Nate, both collapsed amid claims of “AI washing”.
Beijing’s seal of approval
China has put domestic artificial intelligence chips on its official procurement list for the first time, ahead of Donald Trump’s decision to allow Nvidia’s cutting-edge semiconductors to be sold in the country, writes the Financial Times’ Zijing Wu.
AI processors made by Huawei and Cambricon have been added to a government-approved list of suppliers, according to two people familiar with the matter.
The step is designed to encourage the use of Chinese-made chips by public sector groups and could be worth billions in sales to local chipmakers.
Beijing’s move came before the US president announced he would lift export controls to allow Nvidia to ship its advanced H200 chips to ‘approved customers in China’.
However, putting locally made AI chips on to the Information Technology Innovation List — known as Xinchuang in Chinese — is seen as part of Beijing’s determination to wean the country away from US-made hardware.
The rise of humanoids
Goldman Sachs and BofA Global Research estimate that shipments of humanoid robots will reach about 18,000 to 20,000 units in 2025. The figure for 2024 was only about 3,000, meaning any manufacturer capable of producing even a few thousand of the products is already making a meaningful impact on the market.
Chinese companies are taking the lead in this nascent industry, racing to produce humanoid robots for fields ranging from entertainment to retail to smart manufacturing, even as technical hurdles and price issues remain to be conquered, Nikkei Asia’s Cheng Ting-Fang writes.
Shanghai-based robot maker AgiBot, backed by Chinese tech giants Tencent, BYD and Baidu, said on Monday it has reached a milestone of producing 5,000 humanoid robots at its flagship factory since it was founded in 2023. The figure places the start-up among the world’s biggest producers of such products by shipments.
Nuclear is hot
Japanese start-up Helical Fusion has signed an energy deal with a supermarket chain, in a first for Japanese nuclear technology that aims to replicate the power of the sun, Nikkei Asia’s Shotaro Tani reports.
The deal with Aoki Super marks the first power purchase agreement (PPA) signed by a Japanese fusion start-up and comes as the government signals further support for the industry amid increasing international competition to commercialise the technology.
As energy demand spiked globally amid AI data centre build-outs, nuclear energy has attracted attention from private companies and governments alike.
Case in point: Japan’s Hokkaido Electric Power is on track to restart a reactor at its Tomari nuclear plant, a move expected to boost the northern region’s appeal to industry much as the southern island of Kyushu has attracted chipmakers and data centres with cheap energy, writes Nikkei’s Masatoshi Ida.
Suggested reads
Australia’s world-first social media ban for children kicks in (Nikkei Asia)
China set to limit access to Nvidia’s H200 chips despite Trump export approval (FT)
Indian ecommerce platform Meesho rises 46.4% in trading debut (Nikkei Asia)
Kai-Fu Lee: China’s open-source AI is a national advantage (FT)
Japan’s Kioxia to make next-gen memory chips for AI data centres in 2026 (Nikkei Asia)
SK Hynix eyes US listing as AI chips demand more investment (Nikkei Asia)
Airwallex plots Silicon Valley expansion after securing $8bn valuation (FT)
Chinese chipmaker Hygon calls off merger with top shareholder (Nikkei Asia)
Chinese phonemakers seize on Apple’s AI struggles (FT)
Chinese challenger to Nvidia surges 425% in market debut (FT)
#techAsia is co-ordinated by Nikkei Asia’s Katherine Creel in Tokyo, with assistance from the FT tech desk in London.
Sign up here at Nikkei Asia to receive #techAsia each week. The editorial team can be reached at techasia@nex.nikkei.co.jp
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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Pharma companies need to move beyond the “weight loss Olympics” and focus on more durable treatments with fewer side effects, according to the chief executive of Zealand Pharma, which this year agreed a $5.3bn obesity partnership with Roche.
Adam Steensberg, whose Copenhagen-listed group agreed the deal to develop a new weight-loss drug petrelintide in March, said the number of people who stopped using the current blockbuster drugs because of side effects represented an opportunity to offer something more tolerable.
“We need to get away from the weight-loss Olympics, which is about how fast and rapid and how deep you can go . . . We need to get into durability and quality of the weight loss,” Steensberg told the Financial Times ahead of Zealand’s capital markets day on Thursday.
Steensberg claimed data suggested 50 per cent of patients who stopped taking existing GLP-1-based weight-loss drugs did so because of side effects.
In the coming year, Zealand expects phase 2 clinical trial data for petrelintide and phase 3 data for survodutide, a drug licensed to German company Boehringer Ingelheim, which is being tested for the treatment of obesity and MASH, an associated liver disease.
Zealand’s share price has fallen nearly 30 per cent this year. Steensberg said this could be partly explained by “all the uncertainty and all the investments being made into AI” which has caused “cyclical swings” for companies like Zealand with “limited news flow”.
Petrelintide is based on the hormone amylin which makes people feel full more quickly and for longer when they eat. The most popular drugs for weight loss and type 2 diabetes currently on the market — Novo Nordisk’s Wegovy and Ozempic and Eli Lilly’s Mounjaro and Zepbound — belong to a class of medicines based on the gut hormone GLP-1, which suppresses appetite.
Studies have found that amylin-based weight-loss treatments can cause fewer side effects than GLP-1 drugs.
Steensberg said Zealand was “certain that the GLP-1s will not be able to solve the global obesity pandemic because people cannot stay on these therapies for a long run”.
With petrelintide not expected on the market until 2029, by which time generic versions of current blockbuster weight-loss drugs could also be available, Zealand’s flagship product will face stiff competition. Steensberg said he relished the challenge and drew a parallel with consumer behaviours in another market: “There are a lot of cheap used cars today, but many people still buy a new car because they want a different driving experience.”
A spokesperson for Rowan Garth Care Home said it had appointed a “turnaround manager to lead improvements”
Incontinent residents were “wet through” and in need of a change of clothes at a “chaotic” care home where checks for a deadly disease were also not always completed, inspectors have found.
The Care Quality Commission (CQC) has put Rowan Garth Care Home in the Anfield area of Liverpool back into special measures following an inspection in June.
The care regulator, which previously put the home under special measures in November 2022, found “serious failings” this summer, despite a plan having been made last year to improve conditions. The CQC said “no effective action had been taken”.
Wellington Healthcare Ltd, which runs the site, said it had taken “immediate action”.
The care home on Lower Breck Road provides accommodation for older people requiring nursing or personal care.
At the time of inspection, only three of its five units were in operation.
There were 82 people living there.
The CQC downgraded the home’s overall rating from “requires improvement” to “inadequate”.
Assessments for being “safe, effective and well-led” were rated as “inadequate” while the “responsive and caring” assessment criteria were rated as “requires improvement”.
PA Media
The home was described as “very chaotic” by staff, the CQC said
The findings in the CQC report include:
the management of medicines was unsafe, with residents not receiving them at the right time, exposing people to “often painful or uncomfortable symptoms”
staff did not have sufficient clinical guidance on people’s clinical risks and medicines for complex health conditions such as diabetes and epilepsy
Medicines were not always stored at the right temperatures, increasing the risk of them being ineffective
Some people’s continence records showed they were wet through and in need of a change of clothes on multiple occasions, indicating people’s continence care was insufficient
Some residents did not have access to a working bath or an accessible call bell to ring for staff support when needed
Infection control standards were “poor”
Furnishing, fittings and equipment was not always clean or in a good state or repair
Checks to monitor for the risk of Legionella bacteria in the home’s water system were not always completed.
An agency nurse told inspectors how, from their point of view, there were not enough staff and it was “too much”.
The home was described as “very chaotic” with staff described as “knackered”.
‘Expect rapid improvements’
Andrew Peck, of the CQC, said inspectors found “serious failings in leadership that placed people at unnecessary risk of harm”.
He said some residents received time-critical medications hours late which was “especially serious for people with conditions like Parkinson’s disease, where timing is vital”.
He added: “Leaders didn’t ensure the environment was safe and we saw broken equipment and inadequate facilities.
“The call bell system wasn’t fit for purpose and although the provider had been aware of this for over six months, no effective action had been taken to ensure people were able to call for staff help when needed.”
He said: “While we found staff were kind and caring, they weren’t supported by leaders to deliver safe care.
“Leaders also didn’t ensure staffing levels were sufficient, meaning people often experienced delays in receiving support.”
Mr Peck said the regulator expected to see “rapid and continued improvements” and would continue to monitor the home closely to keep people safe.
“We have begun the process of taking regulatory action in order to protect people further.”
Residents’ safety ‘paramount’
A spokesperson for the care home said it was “disappointed” with the “inadequate” CQC rating and said “our priority is to learn from this and take immediate corrective action”.
They said it had “implemented a comprehensive improvement plan to address all concerns raised”.
“We acknowledge there were areas where we did not meet the high standards our residents and their families rightfully expect and deserve.
“The safety and wellbeing of our residents is paramount. We have appointed a highly experienced turnaround manager to lead the improvements at Rowan Garth and ensure sustainable change.
“We remain committed to delivering the quality of care our residents deserve and look forward to demonstrating significant progress at the CQC’s next inspection.”
