The Bank of Japan's interest rate hike triggers a massive market震荡, global assets dance together, and silver hits a new high approaching $67

The Bank of Japan’s decision to raise interest rates like a heavy bombshell has stirred a thousand waves in the global financial markets. The 25 basis point hike seems moderate, but it instantly reshaped the risk landscape of carry trades. As the yen’s rally cooled, the USD/JPY surged by 1.39%, approaching the 158.0 level. Japanese Finance Minister Shunichi Katayama immediately issued a firm warning—stating that appropriate measures will be taken against excessive exchange rate fluctuations. Behind this statement lies a deep anxiety over a potential policy shift by the central bank.

Commodity Market Movements, Silver Breaks Through to Record Highs

The most notable change occurred in the precious metals market. Driven by strong investment demand and supply tightness, silver prices rapidly broke through the $67.0 level, setting a new record. This rally indicates an increasing market demand for physical assets as safe havens, with commodities showing more characteristics of high valuation. Meanwhile, gold closed for the second consecutive day with a doji star, showing technical indecision. Using moving averages, gold is seeking direction around $4,338.6 per ounce, with a gentle gain of 0.14%. In contrast, oil performed even more strongly, with WTI rising 1.14% to $56.5 per barrel. The entire commodities sector is brewing new investment opportunities.

US Stocks Rebound and Close in the Green, Institutional Funds Quietly Flow Back

Last Friday coincided with the US stock “quadruple expiration day,” when futures and options contracts matured en masse, totaling $7.1 trillion in expiring contracts. Against this backdrop, market risk appetite modestly improved, with the VIX fear index plunging 11.57%, reflecting a clear improvement in investor sentiment. The three major indices rose—Dow up 0.38%, S&P up 0.88%, Nasdaq up 1.31%—indicating tech stocks led the rally, while the China Golden Dragon Index also rebounded 0.86%.

Individual stock performance was mixed. Oracle led with a 6.6% gain, while Nvidia and Broadcom rose 3.9% and 3.2%, respectively. Nvidia became the strongest component of the Dow, reflecting sustained demand for AI chips. Micron’s strong quarterly earnings also supported the tech sector. However, Nike’s stock plunged 10.5% due to poor performance in China, highlighting ongoing pressure on the consumer sector. In Europe, UK, France, and Germany stocks rose 0.61%, 0.01%, and 0.37%, respectively, with modest gains.

Bond Markets in Crisis, Yield Curve Deeply Worrisome

The most concerning change comes from the bond markets. The Bank of Japan’s rate hike pushed the 10-year Japanese government bond yield above 2%, reaching a new high since 1999, signaling a historic shift in Japan’s economic fundamentals. France’s budget negotiations broke down, worsening the eurozone debt outlook, with the 30-year government bond yield soaring to 4.525%, the highest since 2009. In the US, the 10-year Treasury yield rose 3 basis points to 4.15%, while the more rate-sensitive 2-year Treasury yield increased 3.2 basis points to 3.492%.

Behind this surge in yields lies a key shift: expectations and pressures for future rate hikes by the Bank of Japan are accumulating. Although nominal interest rate differentials still exist, the “cost-effectiveness” of the yen as a funding currency for highly leveraged global macro hedge funds has significantly diminished. Meanwhile, the Federal Reserve’s Reserve Management Purchases (RMPs) have produced market effects similar to quantitative easing (QE). Will this eventually lead the Fed to accelerate rate cuts? That will be a market focus moving forward.

Diverging Views Among Fed Officials, Rate Cut Outlook Murky

Federal Reserve Bank of New York President John Williams stated that there is no urgency for further rate adjustments at present, as recent employment and inflation data have almost not changed his outlook. He believes the rate cuts already implemented have put policy in a “very good state,” aiming for inflation to return to 2% without harming the labor market. In contrast, Cleveland Fed President Beth Hammack holds a different view, believing that the Fed does not need to adjust rates in the coming months, at least before spring, citing concerns over rising inflation.

This internal disagreement reflects a deeper policy dilemma—the latest forecasts released after last week’s meeting show officials only expect one rate cut next year, far below previous market expectations. US December consumer confidence rose less than expected; the University of Michigan’s final December consumer sentiment index rose to 52.9, below the expected 53.5, with the current conditions index falling to a historic low of 50.4, reflecting deep-seated consumer anxiety about economic prospects.

Forex Market Fluctuations, US Dollar Index Steadily Climbing

The US dollar index rose 0.3% to 98.7, demonstrating the Fed’s support for maintaining high interest rates. USD/JPY surged 1.39% approaching 158.0, while EUR/USD slightly declined by 0.12%. In cryptocurrencies, Bitcoin fell 0.34% in 24 hours to $88,020, and Ethereum dropped 0.03% to $2,976. Latest data shows Bitcoin at $91.13K(+1.30%), Ethereum at $3.13K(+0.97%), reflecting the relative performance of digital assets amid risk appetite recovery. In Hong Kong stocks, the Hang Seng Index futures closed at 25,843 points, up 118 points, 152 points higher than yesterday’s close.

Global Policy and Corporate Developments Move Forward

The Trump administration completed a strategic shift in space policy, confirming prioritization of lunar missions over Mars plans, aiming to send humans to the Moon by 2028 and establish a permanent lunar outpost by 2030, including plans to deploy nuclear reactors on the Moon and in orbit. Behind this decision is a strategic consideration of US-China space competition, with Beijing planning to send astronauts to the Moon and establish a base by 2030. Billionaire Elon Musk was sworn in as NASA’s 15th Administrator, pushing forward the Artemis program.

On the corporate front, US House Republicans are calling for congressional regulation of AI chip exports similar to military sales, with any processor equal or superior to Nvidia’s H200 to be regulated. This directly challenges Trump’s recent decision to allow Nvidia to export H200 chips to China. Meanwhile, ByteDance, TikTok’s parent company, reportedly expects to reach about $50 billion in profit in 2025, a new record, with net profits of approximately $40 billion in the first three quarters, exceeding internal expectations. If achieved, this would approach Meta’s estimated $60 billion for this year. ByteDance has signed binding agreements to spin off TikTok’s US operations into a joint venture controlled by US investors, including Oracle.