December Financial Highlights: The US dollar's nine-day decline comes to a halt, crude oil rebounds over 1%, the Japanese yen hits a key level against the dollar, Meta initiates strategic adjustments with a gain of over 3%

The global financial markets are experiencing a subtle shift. The US dollar index has ended its nine consecutive days of decline, gaining short-term respite; meanwhile, oil prices have rebounded, with WTI rising over 1 percentage point to $58.7 per barrel; in the currency market, the yen remains around 155 against the dollar, reflecting a deep game of policy divergence among global central banks.

Federal Reserve Rate Cut Expectations Dominate Market Sentiment

Signals have come from the White House. National Economic Council Director Hassett stated that the Fed is expected to proceed with a 25 basis point rate cut at next week’s FOMC meeting. This expectation has been widely recognized by the market—according to data from CME Group’s FedWatch tool, the probability of a rate cut next week has risen to 89%, well above the forecast level in mid-November.

However, the latest employment data has cooled this optimism. Last week, the US initial unemployment claims were reported at 191,000, down 27,000 from the previous week, whereas the market had expected 220,000. This data set a three-year low, weakening the case for further rate cuts. Investors are now focusing on the US September PCE inflation data to be released on Friday—this report will directly influence market expectations for future policy paths.

Yen vs. Dollar: Policy Shift Imminent

The focus in the global currency markets is shifting to Japan. The Bank of Japan is scheduled to hold a monetary policy meeting on the 18th and 19th of this month, widely expected to be a turning point. The yield on Japan’s 10-year government bonds has surged to 1.941%, the highest since July 2007, indicating persistent bond selling pressure.

Key is the political change. According to sources, if the Bank of Japan announces a rate hike at this meeting, key members of Prime Minister Sanae Yoshida’s government have indicated they will not oppose it. This suggests that the process for a rate increase is largely cleared, and upward pressure on the yen against the dollar is rising sharply. BOJ Governor Ueda signaled on December 1st that economic growth opportunities are gradually increasing, and a discussion on raising interest rates is a key agenda item for this month’s meeting.

US Stock Indices Diverge, Tech Sector Shows Clear Winners and Losers

US stocks opened with typical divergence. The Dow fell 0.07%, the S&P 500 rose slightly by 0.11%, and the Nasdaq Composite gained 0.22%. The Russell 2000, a small-cap indicator, performed best, closing up 0.76%.

Within the tech sector, clear structural differentiation emerged. Meta rose over 3.4% amid rumors of significant spending cuts; Nvidia followed with over 2% gains; but Amazon and Apple both declined over 1%. Sector-wise, computer hardware and crypto mining companies led the gains, with SanDisk up over 9%, Hut8 up nearly 7%, Dell Technologies up over 4%, and HP up nearly 3%. This reflects ongoing market enthusiasm for AI data centers and energy storage concepts.

Chinese indices also showed some movement, with the Golden Dragon Index up 0.39%.

Diverging Central Bank Policies Drive Asset Rotation

European stocks rose across the board, with Germany’s DAX 30 up 0.79%, France’s CAC 40 up 0.43%, and the UK’s FTSE 100 up 0.19%, indicating optimism about improved global liquidity.

In the bond market, the US 10-year benchmark Treasury yield is around 4.1%, up 1 basis point from the previous trading day. Gold performed modestly, rising 0.13% to $4,205.6 per ounce. In the forex market, the dollar index increased 0.2% to 99.0, the yen appreciated slightly by 0.03%, and the euro declined 0.23% against the dollar.

Cryptocurrencies experienced a correction, with Bitcoin down 1.41% over 24 hours, currently priced at $87,840; Ethereum declined 0.07%, now at $2,950.

Hong Kong night futures edged lower, with the Hang Seng Index futures closing at 25,900 points, down 36 points from yesterday’s close; the China Enterprises Index futures closed at 9,088 points.

US Debt Crisis Highlights: Surpasses $30 Trillion

Another macro signal worth noting is that US sovereign debt has first surpassed the $30 trillion mark. As of November, the total of Treasury bills, medium- and long-term bonds issued by the US Treasury reached $30.2 trillion, doubling since 2018. This is only part of the federal debt; including other debt categories, the total US national debt stands at $38.4 trillion.

The key issue is debt interest payments, which have already reached $1.2 trillion. Citigroup’s rate strategist pointed out that although tariff revenues might bring in an incremental $300-400 billion, they are still far below the current interest burden of the debt. “We are like sinking in quicksand; tariffs may slow the descent but cannot change the direction.” This metaphor vividly illustrates the US fiscal dilemma.

Russia-Ukraine Negotiations Stalemate, Date Uncertain

Russian President Putin has refused to accept parts of the US-backed peace plan, describing negotiations as “difficult,” and Moscow remains cautious about US suggestions. Although the previous round of talks in Moscow between Trump envoy Witkoff and son-in-law Kushner was considered “quite good,” the Kremlin admits that key issues such as territorial control “have yet to reach a compromise.” Ukrainian negotiators are preparing to travel to the US for a new round of talks.

Meta’s Metaverse Strategy Shrinks Significantly, Budget Cuts Loom

Meta CEO Mark Zuckerberg is pushing a major strategic adjustment. According to insiders, management has discussed cutting the metaverse division’s budget by up to 30% next year, covering Meta Horizon Worlds and Quest VR businesses. This strategic shift marks a move away from what was once defined as the company’s future direction.

If the cuts are implemented, Meta could begin personnel adjustments as early as January next year. This move is part of the company’s 2026 budget planning. Zuckerberg has instructed senior executives to seek a 10% overall budget reduction, a standard practice in regular budgeting cycles. However, the cuts in the metaverse division are more substantial, reflecting a reassessment of the sector’s technological competitiveness across the industry.

Commodities Market: Copper Prices Hit New Highs, Supply Concerns Drive Premium

Signals from the commodities market are also noteworthy. Swiss trader MakoRay has announced plans to withdraw over 40,000 tons of copper from the London Metal Exchange’s Asian warehouses, valued at approximately $460 million at current prices. This move helps push up the spot copper contract’s premium over the three-month futures.

The backdrop is market expectations of a copper supply shortage next year. Disruptions in copper mining in Indonesia and Chile, combined with accelerating demand growth, have driven LME copper prices to a record high of $11,540 per ton on Wednesday.

Today’s Economic Calendar and Investment Insights

Key economic data today include the UK November Halifax House Price Index, France’s industrial output and trade balance, Eurozone Q3 GDP revision, Canada’s November employment figures, and US data such as September core PCE inflation, personal spending, University of Michigan Consumer Sentiment Index, and total oil rig count.

The market is currently in a tug-of-war between policy expectations and data confirmation. The prospects of Fed rate cuts, potential BOJ rate hikes, and US debt pressures are shaping the short-term asset price trends. Yen volatility against the dollar reflects the narrowing of global interest rate differentials, while the divergence among US stock sectors hints at a market re-pricing growth and risk assessments.