Global Financial Turmoil: Yen Fluctuations, US Stocks Rebound, Crypto Market Bottoms Out and Bounces Back

A game around exchange rates is unfolding. After the Bank of Japan’s decision to raise interest rates by 25 basis points was implemented, the market did not stabilize as expected; instead, the yen continued to weaken. USD/JPY rose by 1.39%, approaching the 158 level, which has triggered global investors’ anxiety over how many RMB one yen can buy—yen depreciation is rewriting the economic ledger of carry trades.

Japanese Finance Minister Shunichi Suzuki immediately issued a warning, stating that appropriate measures will be taken to address excessive exchange rate fluctuations. After participating in the G7(G7) online finance ministers’ meeting, she emphasized: “There have been obvious unilateral and sharp fluctuations in the past few hours, and we will respond appropriately, including to volatility driven by speculators, based on the US-Japan joint statement signed in September.” Behind this statement is concerns from high-leverage hedge funds about rising yen financing costs—although nominal interest rate differentials still exist, the attractiveness of the yen as a funding currency has significantly declined.

Market risk appetite shifts, stocks and bonds rise together

The change in risk sentiment is first reflected in the decline of the VIX fear index. The VIX dropped by 11.57% from high levels, indicating that market worries about recent volatility have eased. Driven by this, US stocks rallied across the board, with the Nasdaq performing the strongest, rising 1.31% in a single day; the S&P 500 increased by 0.88%; and the Dow Jones rose modestly by 0.38%.

Last Friday was the “fourth quarter settlement day”—futures and options for indices and individual stocks expired simultaneously, often bringing additional liquidity shocks. The total value of expiring contracts on that day reached $7.1 trillion. Against this backdrop, tech giants performed notably: Oracle gained 6.6%, Nvidia rose 3.9%, and Broadcom increased by 3.2%. Nvidia was the strongest component of the Dow on that day, while Nike’s stock plummeted 10.5% due to weak Chinese business.

European markets also followed upward, with the UK FTSE 100 up 0.61%, Germany DAX30 up 0.37%, and France CAC40 virtually unchanged (up 0.01%). However, it is worth noting that negotiations for France’s 2026 budget bill broke down, causing the country’s 30-year government bond yield to rise to 4.525%, the highest since 2009.

Bond yields soar, rate hike expectations rebuild

The Bank of Japan’s rate hike decision triggered a chain reaction. The 10-year Japanese government bond yield broke through the 2% mark, reaching a new high since 1999—indicating that Japan’s long-term borrowing costs have risen significantly. The US bond market also experienced turbulence, with the 10-year benchmark Treasury yield rising 3 basis points to 4.15%, and the more rate-sensitive 2-year Treasury yield increasing by 3.2 basis points to 3.492%.

This scenario raises a key question: will the Bank of Japan’s monetary tightening eventually prompt the Federal Reserve to adjust expectations earlier? John Williams, President of the New York Federal Reserve, gave an answer in a CNBC interview—no, for now. He stated that the Fed currently does not feel urgent to further adjust interest rates, as recent employment and inflation data have almost not changed their outlook. Williams emphasized: “The rate cuts we have implemented have put policy in a very good place, and I want to see inflation fall back to 2% without causing unnecessary damage to the labor market.”

Beth Hammack, President of the Cleveland Fed, holds a more hawkish stance. She believes that after the Fed’s cumulative 75 basis points of rate cuts over the past three meetings, there is no need to adjust rates in the coming months. Hammack’s concerns about rising inflation outweigh worries about the labor market, and she advocates maintaining the current target range of 3.5% to 3.75% until at least spring.

Commodity market highlights: Silver hits new high, gold remains on hold

Driven by investment demand and tight supply, silver prices performed astonishingly, breaking through a historical high of $67.0 per ounce. In contrast, gold closed for the second consecutive day with a doji star, with a price increase of only 0.14%, at $4,338.6 per ounce. WTI crude oil rose 1.14% to $56.5 per barrel. The US dollar index modestly increased by 0.3%, to 98.7.

Crypto assets rebound from the bottom, initial signs of recovery

Although Bitcoin fell 0.34% yesterday, the latest data shows it has rebounded to 93.69K, with a 24-hour increase of 1.24%. Ethereum performed even better, rising 2.93% over 24 hours, with the price reaching 3.23K. This indicates that after a short-term correction, the crypto market is gradually restoring investor confidence.

US consumer confidence remains under pressure, but expectation index hits high

The US December consumer confidence index rose less than expected. According to the latest data from the University of Michigan, the December final consumer confidence index increased by only 1.9 points to 52.9, with economists’ median expectation at 53.5. Joanne Hsu, the survey director, pointed out: “Although there are some signs of improvement at the end of the year, consumer confidence remains nearly 30% below December 2024 levels, as economic conditions continue to be the primary concern for consumers.”

The current conditions index fell to a historic low of 50.4, indicating that consumers remain pessimistic about the current economic environment. However, the expectation index rose to a four-month high, suggesting a slight warming of market outlooks. Consumers’ views on the current situation of large-item purchases worsened to the lowest level in history, putting pressure on retail and durable goods industries.

ByteDance profits near Meta level, TikTok US business spin-off imminent

Mainland social media giant ByteDance has achieved remarkable profit growth. According to insiders, the company is expected to reach approximately $50 billion in profit in 2025, a new record. The company has already accumulated about $40 billion in net profit in the first three quarters, exceeding internal expectations. If achieved, ByteDance’s profitability will approach the estimated $60 billion of its US competitor Meta this year.

To cope with regulatory pressure, ByteDance has signed binding agreements to spin off TikTok’s US operations, establishing a joint venture mainly owned by US investors (including Oracle Holdings). This move aims to ensure platform operations and reduce Chinese company control. Chinese regulators have yet to comment on whether they will approve the transaction.

Trump adjusts space policy, lunar landing prioritized over Mars program

US President Trump confirmed that he hopes to send astronauts back to the Moon as soon as possible, achieve lunar landing by 2028, and then establish a lunar base, temporarily putting Mars missions on hold. The executive order issued by Trump requires the US to send humans back to the Moon before 2028 and establish initial elements of a permanent lunar outpost by 2030. The order also confirms plans to deploy nuclear reactors on the Moon and in orbit.

This policy shift stems from the US’s urgency in competing with China. Beijing plans to send astronauts to the Moon and establish a base before 2030. Trump’s move aims to accelerate progress and ensure US leadership in space. Billionaire and private astronaut Jared Isaacman, a former SpaceX customer, immediately took the oath as the 15th Administrator of NASA.

New regulations for AI chip exports, calls for military-style oversight

US House Republicans are calling for Congress to regulate AI chip exports similarly to arms sales. On Friday, Republican Chairman of the House Foreign Affairs Committee, Brian Mast, proposed the “AI Export Control Act,” requiring notification to Congress for AI chip sales to hostile countries.

According to the draft, any processor with performance equal to or exceeding Nvidia’s H200 will be subject to regulation. This regulation is highly targeted—H200’s performance is about six times that of H20, which is the most powerful chip currently allowed for direct purchase by China under US rules. Notably, Trump earlier this month promised to allow Nvidia to export H200 chips to China, but the new regulatory bill could restrict this promise.

Hong Kong stock index futures rise, Hang Seng Index premium up 152 points

In Hong Kong, the Hang Seng Index night futures closed at 25,843 points, up 118 points, with a premium of 152 points over yesterday’s close of 25,690, with a volume of 11,984 contracts. The China Enterprises Index night futures closed at 8,958 points, up 57 points from yesterday’s close.