November CPI hits new lows, global central bank policies diverge, and crypto asset trends diverge

Yesterday (December 18), the US Bureau of Labor Statistics released the November Consumer Price Index (CPI) data, which became the market focus. The year-over-year increase was only 2.7%, the slowest growth since early 2021, well below economists’ expected 3.1% rise. The core CPI, excluding food and energy, was only 2.6%, falling short of the 3% expectation. Initial unemployment claims also declined to 224,000, slightly below the forecast of 225,000.

Inflation Data Retreats Trigger Market Reflection

The CPI release appeared quite abrupt. Several economists pointed out that housing prices, one of the largest components of the CPI, remained essentially flat over two months, raising questions about the overall data’s authenticity. Capital Economics economist Paul Ashworth stated that while the data might reflect a genuine easing of inflationary pressures, such a sudden stagnation—especially the halt in the upward trend of more persistent service items like rent—is highly unusual.

Morgan Stanley economist Michael Gapen believed that the unexpected decline in this data reflects weakness in the goods and services markets, but some of the reasons may involve methodological issues. He noted that November data was quite volatile, making it difficult to draw definitive conclusions about inflation, and that we need to wait for December data to verify whether this is a statistical anomaly or a genuine slowdown in inflation.

Global Stock Markets Rise on News, Tech Stocks Lead

Following the CPI release, markets anticipated further rate cuts by the Federal Reserve, with the VIX fear index dropping 4.37%. The 2-year US Treasury yield briefly fell to 3.43%, a two-month low; the 10-year Treasury yield dropped to 4.12%.

The three major US stock indices all rose. The Dow increased by 0.47%; the S&P 500 rose 1.16%, ending a four-day losing streak; the Nasdaq surged 1.81%, closing at 23,006 points. Notably, memory chip manufacturer Micron Technology’s outlook was optimistic, with its stock soaring over 10%, making it the day’s standout. Amazon gained 2.5%, Tesla closed up 3.5%, Nvidia and Oracle rose 1.9% and 0.8%, respectively.

The China Golden Dragon Index rebounded 0.97%. European stocks gained, with the UK rising 0.65%, France and Germany up 0.8% and 1%, respectively, with Germany’s DAX 30 index up 1%.

Commodities and Crypto Assets Show Mixed Performance

The commodities market showed divergence. Gold slightly declined after the report, down 0.15%, at $4,332.5 per ounce. WTI crude oil fell 1.48%, to $55.9 per barrel. Copper has increased 34% year-to-date, with regulators expecting copper prices to reach as high as $13,000 by the end of next year.

In cryptocurrencies, Bitcoin fell 0.94 over 24 hours, currently at $85,406. Ethereum declined 0.25% in 24 hours, currently at $2,825.

Diverging Global Central Bank Policies, Focus on Rate Cut Cycle

The Bank of England announced a 0.25% rate cut on Thursday, lowering the rate to 3.75%, the lowest since February 2023, with a 5-4 vote. BoE Governor Andrew Bailey stated that rates are on a gradual downward trajectory, and the inflation decline has been further confirmed. Looking ahead, Bailey expects the central bank to continue a gradual easing path, but the decision to cut rates may become more indecisive, with the pace of rate cuts slowing at some point.

Meanwhile, the European Central Bank maintained interest rates for the fourth consecutive meeting, keeping the deposit rate at 2%. According to sources, ECB officials believe the rate-cut cycle is likely over. Based on the latest economic growth and inflation outlooks, unless significant shocks occur again, deposit rates should remain at 2%. Sources also indicated that any current discussions about rate hikes are premature, with markets pricing in rate cuts unlikely at this time.

Deutsche Bank Survey: AI Valuation Risks Pose Largest Market Threat

According to Deutsche Bank’s latest global market survey, valuation risks related to artificial intelligence (AI) have become the single biggest threat to market stability in 2026. Up to 57% of respondents believe that a collapse in tech stock valuations due to waning enthusiasm for AI is the greatest risk facing the market next year.

The second major concern is the risk of the new Federal Reserve Chair pushing for aggressive rate cuts. Additionally, respondents are worried about a crisis in private capital markets and the possibility of bond yields rising beyond expectations, ranking high among concerns. About 71% of respondents prefer to invest their retirement funds in other parts of the US stock market rather than the “Big Seven,” a preference that has remained relatively stable since July 2024.

Corporate Developments Stir Market Waves

Nike’s second-quarter earnings report caused a nearly 10% drop after hours, at $59.20. The company’s second-quarter revenue was $14.83 billion, up 0.6% year-over-year; net profit was $792 million, down 32%; gross margin was 40.6%, down from 43.6% a year earlier.

Meta is secretly developing a new image and video AI model codenamed Mango, expected to be launched in the first half of 2026. Oracle and OpenAI received power approval for a large data center project in Michigan, with a capacity of 1.4 gigawatts; their combined planned capacity across the US will exceed 8 gigawatts.

Key Market Events Ahead

The Bank of Japan will announce its interest rate decision, Germany will release the January GfK Consumer Confidence Index, and the Eurozone will publish the preliminary December Consumer Confidence Index. In the US, the final University of Michigan Consumer Sentiment Index for December and the November Existing Home Sales (annualized) data will be released.