| China softens its stance on Covid. Powell signals Fed will slow rate hikes. US lawmakers back $10 billion for Taiwan defenses. Here's what you need to know today. China's top official in charge of the fight against Covid said the country's efforts to combat the virus are entering a new phase with the Omicron variant weakening and more Chinese getting vaccinated. It's a fresh sign that Beijing may be seeking to amend its strategy after protests at the weekend were followed by a pledge to crack down on social disorder. The news comes after Bloomberg economists predicted that China will gradually relax Covid containment measures over the next seven months, resulting in a full reopening by mid-2023. The Federal Reserve will slow the pace of interest-rate increases next month, Chair Jerome Powell signaled, while stressing that borrowing costs will need to keep rising and remain restrictive for some time to beat inflation. His comments likely cement expectations for the Fed to raise interest rates by 50 basis points when they meet Dec. 13-14. Stocks in Asia are set to surge following a sharp rally on Wall Street after Powell's comments. Chinese stocks listed in the US soared for a third day, adding to a record rally.  | HSBC is reviewing its New Zealand retail banking operations as the lender looks for ways to streamline its footprint while heading off calls for a full-blown breakup. The news comes after the bank announced it would sell its Canadian unit for $10 billion and close more than 100 branches in the UK. The bank disposed of its French and US retail operations last year, agreed to sell its Russian unit in July and said in November it will merge its Omani unit with a local lender. HSBC has been fighting off calls from shareholder Ping An to break up of the bank. Sam Bankman-Fried, the disgraced founder of the bankrupt FTX crypto empire, denied trying to perpetrate a fraud while admitting to many errors at the helm of the company. "I made a lot of mistakes," the 30-year-old told the New York Times DealBook Summit. Bankman-Fried's participation has sparked controversy given the damaging fallout from the collapse of the FTX exchange and sister trading house Alameda Research. Before the collapse, red flags were seen in all corners of his empire. US lawmakers are poised to back as much as $10 billion to bolster Taiwan's defenses against growing threats from China. The proposal would authorize as much as $2 billion a year in State Department foreign military grant assistance through 2027. US President Joe Biden has pledged to help defend the island if China invades. Meanwhile, NATO chief Jens Stoltenberg warned the alliance not to repeat mistakes made with Russia when it comes to dealing with China. Federal Reserve Chairman Jerome Powell's speech read much like a reiteration of recent commentary from himself and other US policymakers. Inflation is stubbornly high and the Fed will need to keep raising interest rates and keep them at elevated levels until it sees cost pressures move sustainably lower. And yet equities soared along with bonds, while the dollar collapsed. Stocks are looking past the underlying causes for bond market euphoria — recession is coming. Powell's favored yield curve — the spread between current three-month rates and the expected rate for the same bills in 18 months — tumbled into deep inversion. That's an almost sure sign that the US is heading into a deep slowdown and therefore the central bank will soon be easing policy. The question is whether the Fed will deploy the sort of stimulus markets are expecting, and indeed just how severe a downturn is needed to spur such a move. Garfield Reynolds is Chief Rates Correspondent for Bloomberg News in Asia, based in Sydney, | 
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