Bank of Japan's rate hike triggers global capital shifts, US stocks rebound, commodity prices hit new highs, and the yen remains under pressure

The market is experiencing a round of risk appetite recovery. The Bank of Japan announced a 25 basis point rate hike, which temporarily alleviated concerns about short-term “carry trade” liquidations, but the yen remains under pressure. USD/JPY rose by 1.39%, approaching the 158 level. In conversion, 10,000 yen is approximately 610-620 RMB (based on historical exchange rates). Yen depreciation benefits Japanese exporters but increases the pressure on the central bank to intervene.

Japanese Finance Minister Shunichi Katayama has issued multiple warnings, stating that appropriate measures will be taken to respond to excessive exchange rate fluctuations. Against the backdrop of the yen still falling sharply after the rate hike, this intervention stance appears particularly firm. She stated after participating in the G7 finance ministers’ video conference that there have been obvious unilateral and violent fluctuations in recent hours, and that they will respond appropriately to volatility driven by speculators, in accordance with the September US-Japan joint statement. However, the BOJ’s rate hike decision itself did not provide further forward guidance; the decision-makers remain committed to achieving the 2% inflation target in a sustainable manner, based on wage and price trends.

The BOJ’s rate hike has pushed the 10-year government bond yield above 2%, reaching a high not seen since 1999. This indicates that Japan’s status as a global financing currency is rapidly declining in “cost-effectiveness.” For high-leverage global macro hedge funds, rising yen financing costs directly erode profits. Meanwhile, the Fed’s recent Reserve Management Purchase Plan(RMPs) has produced market effects similar to quantitative easing. The divergence in policy directions between the two central banks may become a future market focus—can the BOJ’s tightening force the Fed to accelerate rate cuts?

Risk assets regain favor, US stocks rise across the board

The VIX fear index fell by 11.57%, indicating a clear improvement in market sentiment. The three major US stock indices generally rose: Dow +0.38%, S&P 500 +0.88%, Nasdaq +1.31%. Last Friday coincided with the “quadruple expiration day” (index and individual stock futures and options expiration), with total expiring contracts reaching $7.1 trillion, often leading to increased trading activity.

Tech stocks led the rally, with a certain chip manufacturer performing the strongest, becoming the best performer among Dow components, while communication chip companies also rose by 3.2%. In contrast, sporting goods companies’ stocks fell by 10.5%, with poor performance in China operations being a major drag.

European markets all rose: UK FTSE 100 +0.61%, France CAC 40 +0.01%, Germany DAX 30 +0.37%. However, attention is needed as France’s 2026 budget negotiations have broken down, with the 30-year French government bond yield rising to 4.525%, a high since 2009. The US 10-year Treasury yield increased by 3 basis points to 4.15%, and the 2-year Treasury yield, sensitive to interest rates, rose by 3.2 basis points to 3.492%.

Commodity markets see frequent highlights, precious metals and energy lead gains

Silver prices hit a record high, breaking through $67.0/oz, driven by both investment demand and supply tightness. Gold closed for the second consecutive day as a doji star, at $4,338.6/oz, up 0.14%. WTI crude oil rose by 1.14% to $56.5/barrel, with the energy sector maintaining an overall upward trend.

In cryptocurrencies, Bitcoin’s latest quote is (91.37K) (approximately $91,370), up 1.84% in 24 hours, showing a rebound after recent data updates. Ethereum is at (31.4K) (approximately $3,140), up 1.45% in 24 hours. Both major cryptocurrencies are showing moderate gains.

The US dollar index rose 0.3% to 98.7, indicating a relatively strong dollar but with limited gains. EUR/USD fell by 0.12%. In Hong Kong stocks, the Hang Seng Index night session futures closed at 25,843 points, up 118 points, 152 points above yesterday’s close.

Divergence among Fed officials intensifies, rate cut outlook uncertain

Federal Reserve Bank of New York President John Williams(John Williams) stated that the Fed currently sees no urgency to further adjust interest rates. He believes that the rate cuts already implemented have put policy in a good position, and hopes to see inflation fall back to 2% while avoiding unnecessary damage to the labor market. This highlights internal disagreements among policymakers—the latest forecast from last week’s meeting shows officials only expect one rate cut next year.

Cleveland Fed President Beth Hammack(Beth Hammack) is more hawkish. She believes that after a cumulative 75 basis point rate cut over the past three meetings, there is no need to adjust rates in the coming months. Hammack is more concerned about rising inflation than fragile employment and advocates maintaining the current 3.5%-3.75% target range at least until spring.

Williams pointed out that inflation in November slowed to its lowest in four years, but some “technical factors” may have distorted the data (involving missing data collection in early October and November). He personally believes the Fed does not need to rush to cut rates for now, as core inflation continues to move toward the 2% target, and the labor market is gradually cooling.

Consumer confidence remains low, purchase intentions hit record lows

The US December Consumer Confidence Index rose by less than expected, with the final University of Michigan data up 1.9 points to 52.9, while economists’ median forecast was 53.5. Survey director Joanne Hsu noted that despite signs of improvement at year-end, consumer confidence remains nearly 30% below December 2024 levels, with economic conditions still the primary concern.

The current conditions index fell to a record low of 50.4, while the expectations index rose to a four-month high. Most worrying is that consumers’ views on the current situation for big-ticket purchases have deteriorated to the lowest in history, reflecting ongoing concerns about affordability.

Space race heats up, Trump accelerates moon landing plans

US President Trump signed an executive order on space, announcing the goal of returning astronauts to the Moon by 2028 and establishing initial elements of a permanent lunar outpost by 2030. The subsequent Mars mission has been temporarily shelved. This move reflects the US’s eagerness to surpass China—Beijing plans to achieve lunar landing and establish a base by 2030.

The order also confirms plans to deploy nuclear reactors on the Moon and in orbit, and to enshrine space protection from weapons threats into policy. This is Trump’s first major space policy initiative in his second term. Just before signing the order, billionaire private astronaut Jared IsaacmanJared Isaacman was sworn in as NASA’s 15th administrator. Based on the ArtemisArtemis program launched during Trump’s first term, the US will advance its lunar exploration strategy.

Chip export controls tighten, AI chips may face military-grade review

US President Trump promised earlier this month to allow a major chipmaker to export AI chip H200 to China. However, afterward, Republican members of the House called for congressional oversight of AI chip exports similar to arms sales. House Foreign Affairs Committee Republican Maste proposed the “Artificial Intelligence Regulation Act” on Friday, requiring notification to Congress for AI chip sales to hostile countries.

According to the draft, any processor with performance equal to or exceeding H200 will be subject to regulation. The Progressive Policy Institute reports that H200’s performance is about six times that of H20, which is the strongest chip currently allowed for direct purchase by China under US rules. This means AI chip export policies will face stricter congressional oversight, potentially impacting related companies’ international business strategies.

ByteDance profits hit record high, approaching Meta’s annual earnings

According to Bloomberg, citing insiders, mainland social media giant ByteDance is expected to achieve approximately $50 billion in profit in 2025, a new record. The company’s net profit in the first three quarters of this year has already reached about $40 billion, exceeding internal expectations. If achieved, ByteDance’s profit will be close to Meta’s estimated $60 billion for this year.

ByteDance has signed binding agreements to spin off TikTok’s US operations into a joint venture, with US investors including a certain tech company holding stakes, to ensure platform operation and reduce Chinese control. Chinese regulators have yet to comment on whether they will approve the deal. This move reflects business adjustments by global platforms under geopolitical pressures.