The Federal Reserve holds steady, China's market rescue heats up, and global central bank policies diverge, boosting demand for safe-haven assets.

On Friday, the market staged a policy anticipation show. As Federal Reserve officials repeatedly signal rate cuts, expectations for market rescue in China are also warming, and the policy directions of the two major economies are reshaping global asset allocation. Bitcoin narrowly held above $84,000 during this shift in expectations, Ethereum dipped slightly by 0.41% to $2.94K, while U.S. stocks rebounded across the board, boosting market sentiment.

Fed Officials Turn Dovish, Hope for Rate Cut in December Reignited

New York Fed President Williams’ remarks on Friday ignited expectations of a rate cut. This third-in-command at the Fed hinted at a possible rate cut in December, emphasizing the need to achieve price stability while ensuring full employment. His views directly pointed to the current softening of the labor market—despite accelerated non-farm payrolls in September, the unemployment rate rose to 4.4%, and downside employment risks have clearly increased.

In contrast, inflation pressures have eased. Williams stated that, in the absence of evidence of a second-round tariff effect, core inflation remains on a downward trend. This creates room for the Fed to cut rates. Traders immediately increased the probability of another rate cut at the December 9-10 FOMC meeting to over 50%.

Notably, the U.S. Bureau of Labor Statistics unexpectedly announced that the October Consumer Price Index (CPI), originally scheduled for release on November 7, will be canceled, with the November CPI now scheduled for December 18; the November non-farm payroll report has also been postponed to December 16. This means the market will only receive these key data points after the Fed meeting, further reinforcing dovish expectations.

VIX Fear Index Retreats, Risk Assets Rebound Under Pressure

The rising expectations of rate cuts directly shook market sentiment. The VIX fear index fell 11.32%, indicating a recovery in investor risk appetite. The three major U.S. stock indices all rebounded, with the Dow up 1.08%, the S&P 500 and Nasdaq rising 0.98% and 0.88%, respectively; China’s Golden Dragon Index also rebounded 1.23%.

Cryptocurrency markets also partially recovered from earlier declines. Bitcoin recovered most of its intraday losses, currently trading at $84,635, with a 24-hour change of +0.22%; Ethereum remains under pressure, now at $2.94K.

However, according to U.S. banks citing EPFR Global data, during the week ending November 19, crypto funds experienced a record $2.2 billion outflow, reflecting cautious institutional attitudes toward risk assets.

Commodity Markets Decline for Three Consecutive Days, Gold and Oil Both Soft

Commodity markets generally weakened. Gold fell 0.29% to $4,064 per ounce, consolidating around that level; WTI crude oil dropped 1.33% to $57.9 per barrel, marking a third consecutive day of decline. Additionally, the 10-year U.S. Treasury yield dipped to 4.06%, down 2 basis points from the previous trading day.

Consumer Confidence Hits Historic Low, Fed Faces Dilemma

Despite dovish signals from officials, pessimism on the consumer side is intensifying. The University of Michigan’s latest data shows that the final November consumer confidence index fell from 53.6 in October to 51, with the current conditions index hitting a record low of 51.1, and consumers’ expectations for personal finances dropping to the lowest since 2009.

Survey director Joanne Hsu noted that consumers are frustrated with high prices and shrinking incomes. In the first half of November, the U.S. also experienced a record government shutdown, affecting food assistance and air travel, and impacting federal employee pay.

A positive sign is that consumers’ inflation expectations for the next year fell for the third consecutive month to 4.5%, and long-term inflation expectations decreased from 3.9% to 3.4%. However, the probability of personal unemployment rose to its highest since July 2020, and consumers’ employment security perceptions continued to decline.

Fed Vice Chair: AI Not a Repeat of Internet Bubble

Addressing market concerns about overvaluation of AI companies, Fed Vice Chair Jefferson disagreed on Friday. He believes the current surge in AI stocks is unlikely to repeat the internet bubble burst of the late 1990s, as AI-related companies are more mature and have genuine profitability.

Jefferson further pointed out that, unlike the speculative internet bubble, AI firms have not heavily relied on debt financing so far. He emphasized that when market sentiment shifts, limited leverage could reduce the transmission of financial risks to the real economy. Although the Fed’s report shows about 30% of respondents see a sudden change in market sentiment as a financial system risk, Jefferson believes the overall financial system remains resilient and robust.

Trump Urges Ukraine to Accept Peace Plan

On the geopolitical front, Trump pressured Ukraine. He stated that Thursday is the deadline for Kyiv to accept the U.S.-supported “28-point plan,” given the approaching winter and the need to cease conflict, urging Zelensky to approve it promptly. The plan is almost a replica of Russia’s initial territorial concessions and peace proposals, including Ukraine ceding territory, accepting military limitations, and abandoning NATO aspirations.

Russian President Putin said on Friday that the U.S. plan might serve as a basis for resolving the nearly four-year conflict but believed Kyiv and its European allies lack understanding of Russia’s actual progress in Ukraine.

Bank of Japan Nears Rate Hike, Cabinet Unveils Stimulus Plan

The Bank of Japan is also signaling potential policy adjustments. A board member, Masayoshi Amamiya, told Nikkei that the BOJ is close to deciding on a rate hike and will not wait until the spring wage negotiations. He emphasized that, after inflation adjustments, real borrowing costs remain deeply negative, and the policy rate of 0.5% is below the neutral level, making a rate hike inevitable.

Simultaneously, Japan’s Cabinet approved a stimulus package totaling 21.3 trillion yen, covering price subsidies and targeted investments. Although this is the first major policy move under Prime Minister Sanae Suga’s government, economists question its effectiveness, warning that demand stimulation in an inflationary environment could further push up prices.

Global Stock Markets Diverge, Individual Stocks Show Increased Volatility

European stock markets were mixed—Germany’s DAX 30 fell 0.8%, France’s CAC 40 rose slightly by 0.02%, and the UK’s FTSE 100 gained 0.13%. Tech stocks became a focus in the U.S.—Nvidia plunged 4.3% intraday but still closed down 1%; Oracle fell 5.7%; Tesla declined 1.05%; while Google rose over 3%, Apple gained 1.97%, and Merck climbed 2.9%.

Corporate Moves: Chip Exports and Pharmaceutical Investments

The Trump administration is considering lifting restrictions on Nvidia’s H200 chips exports to China. Reuters reported that the Commerce Department is reviewing the related ban, and plans may change. After the U.S.-China trade and tech truce last month in Busan, this could signal a more friendly U.S. policy toward China.

In pharmaceuticals, AstraZeneca announced a $2 billion investment to expand its Maryland manufacturing plant, planning to create 2,600 jobs in the state. Meanwhile, Google launched a new AI tool, BigQuery, combining machine learning and generative AI capabilities to enhance data processing efficiency and operational speed.

Forex and Crypto Market Snapshot

The US dollar index slightly declined by 0.02% to 100.2; USD/JPY fell 0.67%; EUR/USD declined 0.13%. In cryptocurrencies, Bitcoin’s 24-hour change was +0.22%, trading at $84,635; Ethereum declined 0.41%, at $2.94K.

In Hong Kong stocks, the Hang Seng night futures closed at 25,541 points, up 308 points, 321 points higher than yesterday’s close; the China Enterprises Index night futures closed at 9,035 points.