Breakfast | Bitcoin hits a new high! This week, central banks in the US, Japan, and several other countries will announce interest rate decisions

Market Overview

The market is focused on the decisions of the Federal Reserve, the Bank of England, and the Bank of Japan this week. Last Friday, the Dow Jones fell for seven consecutive days, marking the longest losing streak in four years, while only the Nasdaq rose. Chip stocks supported the Nasdaq's rebound, which has risen for four consecutive weeks, with positive earnings outlooks for AI revenue. Broadcom surged over 24%, with its market value surpassing $1 trillion, boosting the chip index's rebound by over 3%. Marvell Technology rose nearly 11%, but Nvidia fell over 2%, down 6% for the week. Reports suggest that the Trump administration's relaxation of regulations is favorable, leading to Tesla rebounding over 4%, closing at a historic high on the second day of the week.

The China concept index retreated, at one point dropping over 2%, with Fangduoduo experiencing a maximum drop of 15%. The China concept index accumulated gains over the week. The offshore yuan briefly fell below 7.29 yuan.

The yield on 10-year U.S. Treasury bonds rose over 7 basis points to 4.40%. The dollar achieved its best weekly performance in a month, rising nearly 1% over the week. The yen fell towards 154, down over 2% for the week. Bitcoin rose back above $100,000, marking seven consecutive weeks of gains.

Gold fell over 1% on Friday, marking two consecutive declines to a one-week low, but still accumulated gains over the week. Oil rebounded, with U.S. oil reaching a five-week high, up over 6% for the week, while European natural gas fell over 10% this week, marking the largest weekly drop of the year.

During the Asian session, the three major A-share indices and the Hang Seng Index all fell over 2%, with the 10-year government bond yield dropping below 1.8%, while the shipping index rose over 7%.

Bitcoin Hits New All-Time High! Driven by Optimism Over Trump's Support for Cryptocurrency

During the Asian session on Monday morning, the largest digital asset rose over 1% to surpass $10,400.

This exceeded the previous high of $103,800 reached on December 5. Bitcoin has completed seven consecutive weeks of gains, marking the longest streak since 2021.

U.S. President-elect Donald Trump favors a regulatory environment friendly to cryptocurrencies, supports the idea of the national reserve holding Bitcoin, and plans to reverse the Biden administration's crackdown on the digital asset industry.

From Meta to Amazon to Altman, Silicon Valley Giants Rush to "Donate" to Trump

Trump has long accused large tech companies of various abuses, including censorship of conservative media. After winning the election in November, executives from large tech companies rushed to congratulate Trump, contrasting sharply with their more cautious attitude during his first term. The U.S. may be entering an era of comprehensive deregulation, spanning from cryptocurrency to artificial intelligence, as well as energy, defense industries, and health technology. However, on issues like antitrust and immigration, Trump's own stance may prevail.

Trump's nominee for Secretary of Commerce, Lutnick, is a staunch supporter of the stablecoin Tether. Tether has become the cryptocurrency of choice for international criminals, including drug trafficking groups, hackers, and spies, and Lutnick's connection to Tether is inseparable—Tether Limited holds $134 billion in assets Mainly U.S. Treasury bonds, most of which are custodied by Rutnik's company.

Trump's advisors are seeking to relax bank regulations, even to the point of abolishing the FDIC. In the past, the U.S. has never closed any cabinet-level major agency, especially agencies like the FDIC. Analysts point out that any such reform plan could lead to massive job cuts.

U.S. media reports: Apple CEO Tim Cook met with Trump at Mar-a-Lago for dinner. Following Altman, Zuckerberg, and Amazon founder Bezos, Cook has become the latest tech giant executive seeking contact with Trump. During Trump's first presidential term, the relationships of Altman, Zuckerberg, and Bezos with Trump fluctuated, so they are currently seeking to improve their standing in the eyes of the elected president.

Announcement of Adjustments to the Nasdaq 100 Index Components

Newly added popular stocks Palantir and MicroStrategy, while Axon, Illumina, Advanced Micro Devices, and Moderna will be removed from the index.

South Korean National Assembly Passes Impeachment Motion Against President Yoon Suk-yeol

Yoon Suk-yeol's presidential duties are immediately suspended. The Constitutional Court of Korea will complete the impeachment trial process within 180 days. If the Constitutional Court rules that the impeachment is not established, Yoon Suk-yeol will immediately resume the presidency; if the Constitutional Court recognizes the impeachment as established, Yoon Suk-yeol will be immediately removed, and South Korea is expected to hold elections between April and June next year.

Yoon Suk-yeol is immediately suspended, and the "presidential curse" has been accelerated. It took only 11 days from Yoon Suk-yeol's declaration of martial law to his impeachment and removal. Yoon Suk-yeol's martial law gamble marks the culmination of intensified polarization and division in South Korean politics since the 2022 presidential election, following a series of political prosecutions, confrontations between parties, hunger strikes, and assassination attempts. However, whether the joint resistance of the ruling and opposition parties against martial law and the passage of impeachment means that the division in South Korean politics has been resolved is viewed with skepticism by most analysts.

This Week: The Last "Central Bank Super Week" of the Year, 24-Hour Traders Will Be Busy

This Wednesday, the Federal Reserve will hold its last meeting of the year to decide whether to cut interest rates, followed by Japan, Nordic countries, the UK... By the close next Friday, at least 22 central banks worldwide will announce their interest rate decisions, collectively accounting for two-fifths of the global economy.

Analysts believe that although the Federal Reserve is likely to announce another 25 basis point rate cut next Wednesday, the arrival of 2025 and the upcoming tariff policies of Trump's new government may also lead Fed officials to remain cautious about further rate cuts.

Meanwhile, the market expects the Bank of Japan to raise rates again only by 2025, and the Bank of England will remain steady next Thursday. As for the Nordic countries, the divergence in monetary policy remains evident, with the Swedish central bank almost certain to implement a fifth rate cut, while the Norwegian central bank may delay rate cuts until next year

The Federal Reserve's December Interest Rate Decision is Here! Almost 100% Rate Cut?

On Wednesday (18th), the Federal Reserve will hold an FOMC meeting, and the interest rate decision and quarterly economic forecast will be announced on Thursday.

On December 4th, Federal Reserve Chairman Jerome Powell made his last statement before the quiet period began, indicating that considering the U.S. economy has performed stronger than when rate cuts began in September, policymakers may be more cautious about further rate cuts.

Currently, the market widely expects the Federal Reserve to announce a rate cut at the FOMC meeting, with the federal funds futures market showing that Federal Reserve officials are almost 100% likely to choose to cut rates by another 25 basis points.

It is worth mentioning that this expectation is not based on the latest inflation data but rather on the overall economic situation.

Media analysis reminds us not to be surprised by the forward guidance issued by the Federal Reserve after a rate cut this week; the Federal Reserve may cautiously consider the pace of subsequent rate cuts, and they may hint at pausing rate cuts at the beginning of the year and reducing the number of rate cuts in 2025.

Song Xuetao, Chief Macro Analyst at Tianfeng Securities, believes that the Federal Reserve may adopt a "deep V" rate policy in 2025, first cutting rates and then raising them. There are two reasons for the initial rate cut:

The first reason is that Trump's return may put significant political pressure on Powell (the Federal Reserve Chairman) to cut rates.

The second reason is that the inflation trend also supports cutting rates before raising them; Trump's encouragement of domestic oil drilling, along with the easing of the Russia-Ukraine conflict and the Israel-Palestine conflict, will help lower oil prices and reduce inflation. The impact of tariffs raising inflation will manifest in the second half of 2025, putting pressure on the Federal Reserve to raise rates.

China's November Economic Data

On Monday (16th), the National Bureau of Statistics will release economic data for November, including national real estate development, retail sales of consumer goods, and housing prices in 70 cities.

Last month's data showed that from January to October, real estate development investment in China fell by 10.3%, and the sales area of new commercial housing decreased by 15.8% year-on-year. In October, the month-on-month decline in commodity residential sales prices in various cities narrowed or turned to increase, and the year-on-year decline stabilized, with first-tier second-hand housing prices rising month-on-month for the first time in 13 months, with Shanghai increasing by 0.2% and Beijing by 1.0%.

Guangfa Securities believes that the Politburo meeting in September pointed out the need to promote the stabilization of the real estate market, and the Central Politburo meeting on December 9th reiterated the importance of stabilizing the housing market, highlighting the emphasis on this issue. Adjustments to local real estate policies are expected to continue, and there is still marginal space in 2025. The stock market also reflects the importance of policies regarding the real financing of the capital market and the transmission of expectations.

The "trade-in" policy has driven China's retail sales of consumer goods to grow by 4.8% year-on-year in October, marking the second consecutive month of rebound, with the growth rate reaching a new high since January-February.

The Central Politburo meeting emphasized, "We must vigorously boost consumption and improve investment efficiency, and comprehensively expand domestic demand." China Galaxy Securities believes that expanding domestic demand is the top priority, and boosting consumption is of utmost importance.

Since the Politburo meeting in July proposed that "the focus should be on boosting consumption to expand domestic demand," consumption has gradually become a key lever for expanding domestic demand. As the macroeconomic environment in China faces greater uncertainty in 2025, boosting consumption has become even more critical for comprehensively expanding domestic demand

Bank of Japan "Stays Put"? Market Expects Rate Hike to be Delayed Until Next Year

On Thursday (19th), the Bank of Japan announced its interest rate decision, followed by a monetary policy press conference held by Bank of Japan Governor Kazuo Ueda.

Recently, the rebound of the yen has alleviated inflationary pressures from raw material imports, leading many policymakers at the Bank of Japan to be in no rush to take immediate action, even as Japan's borrowing costs remain close to zero.

On December 12th, according to sources cited by Reuters, five individuals familiar with the Bank of Japan's thinking stated that the central bank is inclined to maintain interest rates this week, as decision-makers prefer to take more time to assess overseas risks and clues regarding next year's wage outlook.

On the 11th, Bloomberg reported that Bank of Japan officials believe that waiting before raising rates carries almost no cost, while still keeping an open mind about a rate hike this week, depending on data and market developments.

Some analysts believe that the current situation at the Bank of Japan is not suitable for a rate hike:

"If action is taken in December instead of January, it may lead the market to believe that the Bank of Japan is eager to raise rates to a neutral level for the economy."

However, delaying too long also carries risks. Shusuke Yamada, a strategist at Bank of America, warned:

"If the Bank of Japan postpones a rate hike until March, the theme of arbitrage trading is likely to resurface, and the yen may depreciate again to 155 or slightly below the 157 level reached in November."

U.S. Federal Reserve Inflation Indicator to be Released

On Friday, the U.S. will release the November PCE price index, with November retail data published on Tuesday and the final annualized quarter-on-quarter GDP for Q3 released on Thursday.

Last month's data showed that the October PCE data rebounded to 2.8% compared to September. Rising service prices were the main driver of October's inflation, increasing by 0.4%. This reflects a surge in portfolio management fees, which is synchronized with the rise in U.S. stocks.

Although U.S. inflation has significantly decreased since the Federal Reserve began tightening monetary policy, inflation remains a tricky issue for households and plays a significant role in the U.S. presidential campaign. Despite a slowdown in inflation over the past two years, the cumulative impact of inflation has severely affected consumers, especially those with lower wage levels.

Additionally, the economic agenda of President-elect Trump will complicate the future policy landscape. Some companies have already indicated that they are considering raising prices early next year due to anticipated tariff increases. Data from Yale University's Budget Lab shows that Trump's tariff policies and the retaliatory tariffs they provoke will lead to price increases across the board, from fruits to automobiles, resulting in a 0.75 percentage point increase in U.S. CPI.

Last month's data indicated that U.S. retail sales in October grew, driven by a surge in automobile purchases, while other retail categories suggested some growth momentum as the holiday season approached.

The U.S. GDP for the third quarter remained robust, primarily due to strong consumer spending. The report showed that consumer spending grew by 3.5% in the third quarter, although slightly below expectations and the initial estimate of 3.7%, it still represents the highest growth rate so far this year