Expectations of interest rate cuts are rising, global stock markets are up, the US dollar is weakening, gold, silver, and oil are collectively rising, and cryptocurrencies are rebounding.
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Due to lower-than-expected US consumer data and the potential appointment of a "dovish" Federal Reserve Chair, market expectations for interest rate cuts have risen, driving global stock markets higher and weakening the US dollar. Meanwhile, renewed uncertainty over the Russia-Ukraine ceasefire agreement has triggered safe-haven demand, supporting a rise in gold prices.
On November 26, US stock index futures collectively rose, European stock indices opened higher overall, and Asian stock indices also strengthened. US Treasury prices gave back the previous day's gains, the US dollar index fell, gold, silver, and oil all rose, and cryptocurrencies rebounded.
Recently, with the successive release of economic data delayed by the US government shutdown and several Federal Reserve officials intensively sending dovish signals, market expectations for rate cuts have notably strengthened, with traders now estimating a greater than 90% chance the Fed will cut rates at next month's meeting.
Pepperstone Group strategist Dilin Wu pointed out, "Because the earlier government shutdown disrupted the normal release rhythm of economic data, the sustainability of the market rebound fundamentally still depends on whether subsequent data can confirm the narrative of a soft economic landing."
US stock index futures all rose: S&P 500 futures up 0.36%, Nasdaq 100 futures up over 0.5%, Dow Jones futures up over 0.2%Euro Stoxx 50 index opened up 0.6%, Germany’s DAX up 0.55%, UK FTSE 100 up 0.2%, France’s CAC 40 up 0.6%Nikkei 225 closed up 1.8% at 49,559.07, TOPIX finished up 2% at 3,355.50, South Korea’s KOSPI closed up 2.7% at 3,960.87US 10-year Treasury yield rose 2 basis points to 4.01%, Japan’s 10-year government bond yield rose to 1.815%US dollar index fell nearly 0.2% to 99.73%Spot gold rose 0.5% to $4,151.21/oz, spot silver up 0.89% to $51.92/oz, Brent crude up 0.5% to $62.1/barrelBitcoin rose 0.7% to $87,647.35
Expectations for a Fed rate cut pushed risk assets higher, with all major US stock index futures rising and Nasdaq futures up over 0.5%. The US dollar index fell 0.2% to below the 100 mark. The market is closely watching developments related to the Fed Chair selection,with White House Chief Economic Adviser Kevin Hassett, a major contender, attracting attention. His previously stated support for interest rate cuts further reinforces the market’s dovish expectations.
Garfield Reynolds, head of the MLIV team, stated:
"As investors expect the Fed to cut rates in 2026 while other major central banks keep rates unchanged, the dollar may face a new round of weakness at the start of the new year. In addition, Hassett has publicly called for rate cuts, and it is well known that his stance is very much in line with Trump’s general preference for low rates."
The Bank of Japan is signaling to the market that it may raise rates as early as next month. Driven by rate hike expectations, the yield on Japan’s 10-year government bonds rose to 1.815%. Despite the Prime Minister's statement that he is prepared to take "necessary" forex action, the yen remains weak, with USD/JPY weakening to 156.39.
Boosted by both rate-cut expectations and safe-haven demand amid Russia-Ukraine uncertainty, spot gold rose 0.5% intraday to $4,151.21/oz.
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