Bank of Japan takes action, US stocks rise together, USD/JPY breaks through 158, silver hits a new high

The global financial markets usher in a diversified upward trend. The Bank of Japan announced a 25 basis point rate hike yesterday, effectively easing market concerns over unwindings of carry trades. Coupled with Micron Technology’s impressive first-quarter earnings, market risk appetite has significantly rebounded, with the VIX fear index dropping sharply by 11.57%.

Commodity Markets Shine, Precious Metals Reach Record Highs

Driven by strong investment demand and global supply tightness, silver prices surged to a historic high, breaking through the $67.0 mark for the first time. Gold performed steadily, closing as a doji for the second consecutive trading day, at $4,338.6 per ounce, up 0.14%. WTI crude oil also showed resilience, rising 1.14% to $56.5 per barrel.

Meanwhile, the USD/JPY exchange rate increased by 1.39%, approaching the 158.0 psychological level. The rate hike by the Bank of Japan pushed the 10-year government bond yield above 2%, reaching a new high since 1999, which also raised the cost of yen financing and significantly impacted the carry trade profitability for high-leverage global macro hedge funds.

US Stocks Rebound Across the Board, Tech Stocks Lead

Last Friday coincided with the US “quadruple witching” expiration, when futures and options contracts for indices and individual stocks settled simultaneously, with total expiring contracts worth up to $7.1 trillion. Against this backdrop, the three major US indices all rose: Dow up 0.38%, S&P 500 up 0.88%, Nasdaq Composite up 1.31%. The China Golden Dragon Index also rebounded by 0.86%.

European markets followed suit, with the FTSE 100 up 0.61%, CAC 40 up 0.01%, and DAX 30 up 0.37%.

In individual stocks, Oracle led the gains, closing up 6.6%; Nvidia and Broadcom rose 3.9% and 3.2%, respectively, with Nvidia being the strongest component of the Dow. Conversely, Nike’s stock fell 10.5% due to sluggish business in China.

Cryptocurrency Markets Slightly Correct, Bitcoin and Ethereum Dip

According to the latest data, Bitcoin is currently priced at $87,710, up 0.14% in 24 hours; Ethereum is at $2,940, down 0.72% in 24 hours. The market has shown structural divergence amid changing expectations of central bank policies.

Fed Officials Cautious, US Rate Hike Outlook Uncertain

Regarding the policy trajectory after the US rate hike, Fed officials hold differing views. New York Fed President Williams stated that the Fed currently lacks urgency to further adjust interest rates, as recent employment and inflation data have not changed his outlook. He believes the implemented rate cuts have kept policy relatively stable, aiming to bring inflation back to 2% without harming the labor market.

Cleveland Fed President Mester is more conservative, advocating no rate adjustments in the coming months. She is more concerned about rising inflation than employment risks, suggesting the Fed should keep the target rate at 3.5%-3.75% and only reassess in spring. This contrasts with market expectations of further rate cuts, as the Fed’s minutes from last week only projected one rate cut next year.

The 10-year US Treasury yield is approximately 4.15%, up 3 basis points from the previous trading day; the 2-year yield rose to 3.492%, reflecting a re-pricing of market expectations for Fed policy.

Japanese Finance Minister Issues “Intervention Warning” Again

After participating in the G7 finance ministers’ video conference, Japanese Finance Minister Shunichi Suzuki stated that Japan will take appropriate measures to address excessive exchange rate fluctuations. She specifically pointed out that the recent one-sided and sharp yen volatility over the past half day is concerning, and Japan will act based on the joint statement signed with the US in September to respond to abnormal fluctuations, including speculative volatility.

Cold Consumer Confidence Data Raises Economic Concerns

The US December Consumer Confidence Index underperformed expectations. The University of Michigan’s final December index rose to 52.9, short of the expected 53.5. The index has fallen nearly 30% compared to December 2024, with consumer worries about economic conditions remaining a primary concern. The current conditions index hit a historic low of 50.4, while the expectations index rose to a four-month high. Notably, consumer outlooks on purchasing big-ticket items have deteriorated to historic lows, complicating the Fed’s future policy decisions.

Global Hotspot Highlights

ByteDance Profits Hit New High: Reports indicate that TikTok’s parent company ByteDance is expected to achieve approximately $50 billion in profit in 2025, setting a new record. The company has already accumulated about $40 billion in net profit in the first three quarters of this year, surpassing internal expectations. If achieved, ByteDance’s profit will approach Meta’s estimated $60 billion this year.

US Calls for AI Chip Regulation: The Republican Chair of the House Foreign Affairs Committee proposed the “Artificial Intelligence Regulation Act,” requiring congressional oversight of AI chip sales to hostile countries. The bill stipulates that any processor with performance equal to or exceeding Nvidia’s H200 will be subject to regulation, marking a tightening of US export controls on AI chips.

Trump Adjusts Space Strategy: President Trump issued an executive order to send astronauts back to the Moon by 2028 and establish a permanent lunar outpost by 2030, temporarily shelving Mars missions. This move aims to outpace China, which plans to achieve similar goals by 2030.