End-of-year US stocks under pressure, Federal Reserve internal divisions intensify, cryptocurrencies continue to rise

Uncertainty in Federal Reserve Policy Clouds Market, US Major Indices Continue to Decline

Entering the last trading day of the year, the global financial markets face new challenges. After the Federal Reserve released the December meeting minutes, market volatility significantly increased. According to the latest data, all three major US stock indices declined, with the Dow Jones Industrial Average falling by 0.2%, the S&P 500 weakening for three consecutive trading days with a decline of 0.14%, and the Nasdaq Composite dropping by 0.24%. Meanwhile, the China Gold Dragon Index fell by 0.27%.

European markets performed relatively strongly, with the UK, France, and Germany stock indices rising by 0.75%, 0.69%, and 0.57%, respectively. This regional disparity reflects investors’ divergent expectations for different economies.

Internal Disputes in the Federal Reserve Widen, Policy Direction Still Uncertain

The December Federal Reserve meeting minutes revealed an undeniable fact: the Federal Open Market Committee(FOMC) approved a 25 basis point rate cut with a voting result of 9 to 3. This was the most opposition votes since 2019, fully reflecting serious disagreements within the committee over future policy directions.

The minutes show that most participating officials believe that if inflation gradually declines as expected, further lowering the federal funds rate would be reasonable. However, some officials expressed differing views. Kansas City Fed President Esther George and Chicago Fed President Austan Goolsbee publicly opposed rate cuts, while White House advisor Milan advocated for a more aggressive 50 basis point reduction. Some officials explicitly stated that maintaining stable rates for a period after the December meeting might be a more prudent approach.

This diversity of policy stances reflects the internal dilemma within the committee between supporting the labor market and controlling inflation risks. Officials generally expect the economy to continue expanding at a “moderate” pace but remain cautious about downside risks to employment and the ongoing rise in inflation.

Federal Reserve Economic Outlook Adjusted, Growth Expectations Post-2025 Slightly Improved

The latest Federal Reserve staff economic projections have been adjusted upward from October. By 2028, real GDP growth is expected to slightly accelerate, mainly due to expectations that financial market conditions will provide greater support and that potential output growth will strengthen.

Notably, as the negative impact of high tariffs gradually diminishes, fiscal policy and financial market conditions continue to support spending. GDP growth is expected to remain above potential growth rates by 2028. Correspondingly, the unemployment rate is expected to gradually decline after this year, reaching slightly below the natural rate by 2027. The staff’s inflation forecasts for 2025-2026 are slightly lower than October’s projections, but forecasts for 2027-2028 remain largely unchanged.

Uncertainty in Monetary Policy Raises Market Volatility

Faced with ambiguity over the Federal Reserve’s policy outlook, market volatility indicators surged sharply. The MOVE index (an important measure of bond market expected volatility) rebounded by 8.05%, reflecting a significant increase in traders’ uncertainty about interest rate trends.

The US dollar index rose to 98.21, up 0.21%. Meanwhile, the 10-year US Treasury yield slightly increased, currently around 4.12%, while the 2-year Treasury yield declined for four consecutive trading days, indicating ongoing disagreement over short-term policy direction. Gold prices experienced a high-level correction, retreating after a rally, currently at $4,338.3 per ounce, with a modest increase of 0.14%. Silver performed relatively resiliently, rebounding by 5.67%.

Foreign Exchange and Commodities Market Volatility

As the US dollar strengthened, USD/JPY rose by 0.24%, while EUR/USD declined by 0.21%, reflecting increased demand for US dollar safe-haven assets. The crude oil market saw a slight increase, with WTI crude at $57.9 per barrel, up 0.21%.

Cryptocurrency Continues to Rise, Bitcoin and Ethereum Perform Steadily

Against the backdrop of weakness in stocks and bonds, the crypto market performed relatively strongly. According to the latest data, Bitcoin is quoted at $91.25K, up 1.42% in 24 hours, indicating continued capital inflow amid macro uncertainties. Ethereum is quoted at $3.14K, with a 24-hour increase of 1.17%, maintaining an upward trend. This suggests that some investors are reallocating into digital assets when traditional assets face pressure.

Hong Kong Stock Futures Slightly Lower

In Hong Kong, Hang Seng Index night session futures closed at 25,880 points, down 45 points from the previous close, showing a slight premium of 25 points. The China Enterprises Index night session futures closed at 8,998 points, 7 points higher than the previous close.

Mainstream Tech Stocks Show Mixed Performance, AI Acquisitions Focus

US tech stocks showed mixed results. Meta was favored by investors after acquiring AI startup Manus, with its stock rising by 1.1%. Alphabet rose slightly by 0.1%, while Nvidia and Apple declined by 0.36% and 0.25%, respectively. Microsoft increased by 0.08%, and Amazon rose by 0.2%.

Meta’s acquisition of Manus, valued at “several billion dollars,” became its third-largest acquisition. Manus focuses on developing general-purpose AI agent technology that can serve as “digital employees” to perform research and automation tasks independently. Meta plans to integrate this technology into its consumer and commercial products, serving billions of users and millions of enterprises.

Ukraine Negotiation Progress, Geopolitical Focus

Ukrainian President Zelensky stated that Ukraine is discussing with the US Trump administration and European “Volunteer Alliance” countries the possibility of deploying US peacekeeping troops within a security framework, with the final decision resting with the US. Kyiv welcomes this move, believing it will play a strong role in security guarantees.

Ukrainian negotiation delegations have reached consensus with “Volunteer Alliance” countries to hold a meeting on national security issues this Saturday in Ukraine, and a leader-level summit in France next Tuesday, with US representatives participating. French President Macron will host the “Volunteer Alliance” meeting in Paris early next month, where participating countries are expected to finalize specific contributions to Ukraine’s security framework.

Chip Trade Policy Adjustments, Samsung and SK Hynix Approved

The US government has made slight adjustments to its chip trade policy. Samsung Electronics and SK Hynix are reportedly approved by the US to export US-made chip manufacturing equipment to China in 2026. This marks a policy adjustment following the earlier removal of some export exemptions for tech companies’ shipments of US chips to China this year.

Both companies previously benefited from the “Verified End User”(VEU) system, allowing them to import certain controlled items from the US. However, the US Department of Commerce revoked their exemptions for using US equipment in Chinese factories in August this year, with the measures taking effect in December. The new approvals indicate that US policy, while maintaining overall restrictions, still retains some flexibility.

Economists Warn of Credit Bubble Risks, Historical Divergence Patterns Emerge

Renowned economist Henrik Zeberg recently issued a warning that the global financial markets are approaching a dangerous late-stage peak. He pointed out that despite ongoing economic weakness, stock and other risk assets have surged to extreme levels that are unsustainable.

Zeberg describes this rally as the final chapter of a credit-driven bull market. He emphasizes that the current rise is increasingly detached from fundamentals—while economic growth slows, stock prices continue to climb. This historic divergence often signals a sharp reversal. The market generally believes that central banks worldwide will continue to support the markets, but this in itself has become a systemic risk. Zeberg notes that a significant portion of apparent wealth is built on credit foundations, which are prone to reversal. As the business cycle reasserts itself, the long-term consequences of excessive monetary easing may suddenly surface, exposing market vulnerabilities and setting the stage for a severe correction—potentially marking the end of the post-2008 monetary era.

SoftBank Completes Investment in OpenAI, Holding Over 10%

According to media reports, SoftBank has completed a $40 billion investment commitment in OpenAI. Last week, SoftBank finalized the final transfer of $22-25 billion, and combined with its previous co-investment of $10 billion, its stake in OpenAI now exceeds 10%.

Key Economic Data to be Released Today

Investors should watch for the release of key economic data, including China’s December official manufacturing PMI, US initial jobless claims for the week ending December 27, and US EIA crude oil inventories for the week ending December 26.