US Treasury Secretary Scott Bessent criticized the Bank of Japan’s cautious approach to raising interest rates, saying it was acting too slowly to curb inflation. “They’re behind the curve,” Bessent told Bloomberg TV, in a rare public rebuke of a foreign central bank. 

The yen gained against the dollar while Japanese 10-year yields ticked up as markets bet the BOJ may be pressured to raise rates. The currency recently fell against the dollar to its weakest level since March after the BOJ held rates steady and amid speculation that recent political instability might prevent it from raising rates. Japan’s ruling coalition lost its majority in last month’s upper house election, raising concerns over the nation’s fiscal outlook.

Some economists fretted that Bessent’s latest comments might complicate matters. By commenting on the monetary policy of another country, “he’s breaking the rules, and it’s possible that this actually makes it more difficult for the BOJ to take action,” said Hideo Kumano, a former BOJ official who’s now executive economist at Dai-Ichi Life Research Institute. —Ritsuko Ando

What You Need to Know Today

Tropical storm Podul dumped heavy rain on southern China. Hong Kong’s Central business district and outer airport were hit by violent gusts and torrential rain, forcing schools to shut. The city’s authorities put in place their highest-level “black” rainstorm warning. The national security trial of ex-media mogul Jimmy Lai was delayed as a result of the alert. The closely watched trial was entering its final arguments. Lai, the 77-year-old founder of the now-defunct Apple Daily newspaper, is facing charges of conspiring to collude with foreign forces under the national security law and a colonial-era sedition charge. He has been detained since December 2020.

Rainwater rushes down a stairway in Kennedy Town district during heavy rainfall on Thursday. Photographer: Kevin Dharmawan/Bloomberg

Bitcoin hit a record high in line with a rally in US equities. Traders are snapping up various risky assets in the hope that falling US interest rates will add fuel to the economy. Bitcoin had already steadily risen for most of the past year as a result of the friendly legislative climate in Washington, and after public companies began stockpiling the original cryptocurrency. US inflation data this week also strengthened bets the Federal Reserve will cut interest rates in September, easing financial conditions and encouraging capital to flow from blue-chip equities to volatile digital tokens. 

China will send a top official to New Delhi next week as Beijing steps up efforts to ease long-standing tensions with India amid Trump’s global trade overhaul. A key agenda item will be ways to reduce troop levels along the disputed Himalayan border, according to sources. The two countries are also discussing resuming border trade for the first time in more than five years. 

Hon Hai Precision Industry posted a better-than-projected rise in quarterly profit and forecast accelerating sales growth from its key AI server business. Hon Hai, which assembles Nvidia servers and Apple iPhones and is also known as Foxconn, forecast the current quarter will deliver a 170% rise in revenue from servers made for artificial intelligence tasks. They’ve become its growth engine at a time of moribund demand for consumer tech. It now sees business for smart consumer electronics, which includes iPhone assembly, sliding this year. 

China is preparing to mobilize companies owned by the central government in Beijing to purchase unsold homes from distressed property developers, according to people familiar with the matter. Regulators are planning to ask some of the biggest state-owned enterprises and bad debt managers including China Cinda Asset Management to help clear the housing glut, said the people. The renewed effort could help speed up the clearance of China’s 408 million square meters of excess inventory - larger than the size of Detroit - and ease the financial burden of the troubled developers. 

More than a year after China Evergrande Group’s liquidators began pursuing the wealth of seven key defendants, the high-profile case is now entering a critical phase. So far Hui Ka Yan, the founder of Guangzhou-based Evergrande, has refused to disclose his assets, escalating tensions between him and creditors. At the heart of the matter is $6 billion worth of assets in the form of mostly dividends and remuneration that were paid to people including Hui and other defendants. The property mogul was known for his lavish lifestyle and exemplified the country’s real estate boom and bust. 

The Evergrande Palace project.  Bloomberg

The sister of North Korean leader Kim Jong Un said Pyongyang has no intention of improving relations with South Korea. Kim Yo Jong, in a statement titled “Hope of Seoul is Nothing but a Foolish Dream” and carried by state media, dismissed reports that border loudspeakers were removed in response to Seoul’s peace overtures. “Whether the ROK withdraws its loudspeakers or not, stops broadcasting or not, postpones its military exercises or not, and downscales them or not, we do not care about them and are not interested in them,” she said. ROK stands for the South’s official name, the Republic of Korea. 

Kim Yo Jong. Photographer: Jorge Silva/Reuters

What You’ll Need to Know Tomorrow

For Your Commute

Starbucks introduced China to the cafe experience in the 1990s. Its footprint in the country expanded in tandem with the economy, bringing its number of stores there to over 7,800. But, like many other Western consumer brands, it has lost ground to cheaper local options. Luckin Coffee overtook Starbucks as China’s biggest coffee chain two years ago. Now, as the company explores a stake sale in the country, it’s struggling to find a new identity.

A Starbucks store in Nanjing.  Source: Starbucks Corp.

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