Year-end asset rotation begins: RMB breaks through 7, precious metals lead the global market rally

Renminbi Strength Continues, Year-End Currency Settlement Demand Ignites

Against the backdrop of major markets being closed during the Christmas holiday, the offshore Renminbi (RMB) against the US dollar experienced a dramatic surge on December 25. The exchange rate appreciated to a high of 6.9960 during trading, breaking the 7.0 threshold for the first time since September 2024. The onshore USD/RMB also fell to 7.0051, hitting a new low since May 2023. Traders generally report that year-end settlement demand is strong, and external dollar rebound momentum is lacking, with the market betting that the central bank will support the RMB to gradually appreciate.

Goldman Sachs’s latest research report indicates that the People’s Bank of China (PBOC) has recently alternated between describing the economy as “resilient” and “flexible,” implying an open attitude toward a stronger RMB. However, they also hope to slow the pace of appreciation to avoid impacting exports. Goldman Sachs maintains its exchange rate forecasts: in 3 months, 6 months, and 12 months, the USD/RMB will reach 6.95, 6.90, and 6.85 respectively.

Gold and Silver Surge Simultaneously, Gold’s Proportion Reaches New Heights

End-of-year risk aversion sentiment continues to intensify, reaching a new milestone on December 26. Gold prices soared to $4,504, breaking the $4,500 mark for the first time; silver rose to $73.67, both hitting record highs. Amid expectations of global central bank rate cuts and geopolitical risks, gold’s role as a traditional safe-haven asset has increased, becoming an important component in investment portfolios.

Federal Reserve Expected to Moderate Rate Cuts Next Year, Global Interest Rate Landscape Changes

Bank of America (BofA) offers a new outlook on the 2026 economic prospects. The bank expects the Federal Reserve to cut interest rates once in June and once in July next year. It forecasts the 10-year US Treasury yield will fall back to the 4% to 4.25% range by the end of the year, with further downside potential. This indicates that global borrowing conditions will become more accommodative, but not to the extent seen during the ultra-low interest rate era, making it difficult for housing and stock markets to replicate past gains.

Bank of Japan Maintains Rate Hike Path, Ueda Kazuo Signals Hawkish Stance

Bank of Japan Governor Kazuo Ueda delivered a speech to high-level economic circles, reaffirming that the central bank will continue its rate hike process. He pointed out that Japan’s core inflation is steadily approaching the 2% target, and structural tightness in the labor market will continue to push wages and prices higher. Companies have significantly passed on costs in food and other goods, forming a mechanism where wages and inflation rise in tandem. Given that real interest rates remain low, Ueda hinted that if the baseline scenario materializes, the BOJ will continue to raise rates.

Japanese Prime Minister Sanae Yoshida also announced that the FY2026 budget will reach 122.3 trillion yen, a record high since the initial budget, but new government bond issuance will be limited to 29.6 trillion yen, and debt dependence will fall to 24.2% for the first time in 27 years. This demonstrates an effort to balance fiscal discipline with economic growth.

Technology Stocks Rotation Approaching, Semiconductor Sector Expected to Break Trillion USD

Bank of America semiconductor analyst Vivek Arya states that AI development is in the middle of a decade-long structural transformation, with industry momentum still upward and leading companies clearly at the forefront. The bank forecasts global semiconductor sales will grow by 30% in 2026, with annual sales surpassing $1 trillion for the first time. Companies with high gross margins and strong market positions will be focal points for capital allocation, naming NVIDIA, Broadcom, Lam Research, KLA, AMD, and Cadence Design Systems as six leading players.

NVIDIA has reached licensing agreements with AI chip startup Groq, granting NVIDIA rights to use Groq’s technology and hiring its CEO Simon Edwards. Groq will continue to operate independently. Focused on the “inference” domain, Groq is in a highly competitive space with NVIDIA.

US Stocks Likely to Fall Short of Double-Digit Gains Next Year

CFRA Chief Investment Strategist Sam Stovall offers a more cautious outlook, suggesting that achieving double-digit gains in US stocks again would require “all engines running at full speed.” The firm sets its S&P 500 target for the end of 2026 at 7,400 points, about 7% higher than current levels, implying that next year’s gains may not match the good times of the past.