Interest rate cut expectations rise, global stock markets surge, the US dollar weakens, gold, silver, and oil collectively rise, and cryptocurrencies rebound

Due to U.S. consumer data falling short of expectations and the potential "dovish" candidates for the Federal Reserve chair, market expectations for interest rate cuts have risen, driving global stock markets higher and the dollar weaker. Meanwhile, the uncertainty surrounding the Russia-Ukraine ceasefire agreement has once again triggered safe-haven demand, supporting an increase in gold prices.

On November 26, U.S. stock index futures rose collectively, European stock indices opened higher overall, and Asian stock indices strengthened simultaneously. U.S. Treasury prices retraced previous gains, the dollar index fell, and gold, silver, and oil all rose, with cryptocurrencies rebounding.

Recently, as the backlog of economic data during the U.S. government shutdown has been released, coupled with several Federal Reserve officials intensively signaling dovish stances, market expectations for interest rate cuts have significantly strengthened, with traders estimating that the probability of the Federal Reserve cutting rates at next month's meeting has exceeded 90%.

Pepperstone Group strategist Dilin Wu pointed out that the sustainability of the market rebound "fundamentally depends on whether subsequent data can validate the narrative of an economic soft landing," due to the disruption of the normal release rhythm of economic data caused by the previous government shutdown.

• U.S. stock index futures rose collectively, with S&P 500 futures up 0.36%, Nasdaq 100 futures up over 0.5%, and Dow futures up over 0.2%
• The Euro Stoxx 50 index opened up 0.6%, Germany's DAX index rose 0.55%, the UK's FTSE 100 index rose 0.2%, and France's CAC 40 index rose 0.6%
• The Nikkei 225 index closed up 1.8%, at 49,559.07 points, Japan's Topix index rose 2%, at 3,355.50 points, and South Korea's Seoul Composite Index closed up 2.7%, at 3,960.87 points
• The yield on 10-year U.S. Treasuries rose 2 basis points to 4.01%, while Japan's 10-year government bond yield rose to 1.815%
• The dollar index fell nearly 0.2%, at 99.73
• Spot gold rose 0.5% to $4,151.21 per ounce, spot silver rose 0.89% to $51.92 per ounce, and Brent crude oil rose 0.5% to $62.1 per barrel
• Bitcoin rose 0.7% to $87,647.35

Expectations for Federal Reserve interest rate cuts have driven risk assets higher, with U.S. stock index futures rising across the board, Nasdaq futures up over 0.5%, and the dollar index down 0.2% below the 100 mark. The market is closely watching the developments regarding the Federal Reserve chair candidates, with White House chief economic advisor Kevin Hassett being a major contender, whose previous public calls for interest rate cuts have further strengthened market expectations for easing.

MLIV team leader Garfield Reynolds stated:

“As investors expect the Federal Reserve to cut rates in 2026 while other major central banks maintain rates, the dollar may face a new round of weakness at the start of the new year. Additionally, Hassett's current public calls for rate cuts are well known to align closely with Trump's overall tendency to support low rates.”

The Bank of Japan is signaling to the market that it may raise interest rates as early as next month. Driven by expectations of an interest rate hike, the yield on Japan's 10-year government bonds rose to 1.815%. Despite the Japanese Prime Minister stating readiness to take "necessary" foreign exchange actions, the yen remains weak, depreciating against the dollar to 156.39.

Supported by safe-haven demand driven by expectations of interest rate cuts and uncertainties in the Russia-Ukraine situation, spot gold rose 0.5% during the day, reporting at $4,151.21 per ounce.

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