Daily Brief - 13 May 2024

Global superpowers ramp up $81 billion investment in chip technology

In a race for technological dominance, countries led by the USA and the EU are investing a whopping $81 billion to develop advanced semiconductors, escalating the tension with China.

This is part of a larger plan which aims to channel nearly $380 billion into semiconductor production. The investment seeks not only to advance technology but also to secure economic and military advantages, intensifying the US-China rivalry.

Global competition in the EU and other regions are also boosting their chip manufacturing capabilities. This surge in spending is critical for future tech innovations like AI and could lead to overproduction unless well managed.

Amazon, Pfizer, Morgan Stanley set to boost French economy with €15 billion investments

At the "Choose France" summit hosted by President Macron at Château de Versailles, leading global companies like Amazon, Microsoft, and Pfizer, alongside Morgan Stanley, will unveil new investments totaling over €15 billion.

These investments aim to enhance France's appeal as a post-Brexit European financial hub and bolster its industrial sector. Among the projects, Amazon plans a significant expansion in logistics and AI, Microsoft will focus on cloud and AI infrastructure, and Pfizer will reinvest in pharmaceutical developments.

Additionally, novel ventures in electric aviation and green manufacturing are set to create thousands of jobs, reflecting France's strategic push towards re-industrialisation and technological leadership.

BOJ adjusts bond buying strategy amid yen weakness

The Bank of Japan (BOJ) has reduced its bond purchase amount for the first time since December, a move aimed at curbing its extensive involvement in the domestic bond market.

This decision, likely in response to the ongoing depreciation of the yen, has led to an immediate increase in Japanese bond yields, potentially reducing the significant yield gap between Japan and the US.

This gap has been a key factor in the yen's recent weakness. The BOJ's shift reflects a strategic pivot towards using short-term interest rates as its primary policy tool, post speculation of potential interest rate hikes. This adjustment comes as financial experts anticipate increased volatility in the bond market, with the yen showing some recovery following the announcement.