Good morning. Here's what happened overnight and what you need to know today.
1.
Fed plot: The US Federal Reserve cut interest rates by 25 basis points for the third straight time, lowering the benchmark range to 3.5%-3.75%, with the FOMC voting 9–3 in favour. It marks the first triple dissent since 2019, reflecting deep divisions over whether persistent inflation or a weakening labour market poses the greater risk. Fed Governor Stephen Miran pushed for a larger half-point cut, while Chicago’s Austan Goolsbee and Kansas City’s Jeffrey Schmid opposed any reduction. The decision came alongside updated projections, pointing to one cut in both 2026 and 2027. Forecasts also revised 2026 growth up to 2.3% and trimmed next year’s core inflation to 2.5%. It comes as Trump is expected to announce Powell’s replacement in coming weeks, with Kevin Hassett seen as the frontrunner. The outlook may shift quickly, with delayed inflation and labour data that had been held up by a 43-day government shutdown, due soon. (Fed)(Bloomberg)(Reuters)
2.
Deep smuggle: Nvidia rejected a report that Chinese AI startup DeepSeek is using thousands of its export-restricted Blackwell chips to build a new model, saying it has “not seen any substantiation” or received tips of the type of smuggling operation described. The Information, citing six unnamed sources, reported that DeepSeek obtained the chips through a scheme involving data centres in countries where sales are permitted, with servers dismantled and shipped into China. The US banned Nvidia’s Blackwell chips from being sold to China in 2024. Despite Beijing’s push for domestic AI hardware, executives from Chinese AI firms told the publication that local chips are not yet sufficient for training models. DeepSeek previously used A100 and Hopper chips and released an experimental model in September described as a step toward a next-generation system, with its R1 model drawing international attention in January. It comes as Donald Trump this week approved limited sales of Nvidia’s H200 chips to China and Reuters reported Bytedance and Alibaba have already enquired about purchasing large amounts of those chips. The more advanced Blackwell chips remain subject to export restrictions. (The Information)(CNBC)
