Closing Recap 

U.S. stock futures are pointing to a sharply lower open to start the new week and month, as a wave of risk aversion sweeps through global markets. Nasdaq futures are down around 1%, signaling that the tech sell-off is set to resume, while Bitcoin has plunged below $86,000. The cautious mood comes after a mixed bag of weekend data from China confirmed a loss of economic momentum, and as investors brace for the first major U.S. data release of the week, the ISM Manufacturing PMI. The Japanese yen was the main outperformer, surging after Bank of Japan Governor Ueda gave his strongest signal yet that a December rate hike is on the table. This hawkish tilt sent Japanese government bond yields to multi-year highs. Gold continued its impressive rally, climbing to a new six-week high, while crude oil also found a bid. 

Key Takeaways 

• Risk-Off Mood Grips Markets to Start New Month: U.S. futures are pointing to a sharply lower open, with the Nasdaq set to lead declines as the tech and crypto sell-off resumes to start the new month. 
• BoJ Signals December Rate Hike, Yen Surges: The Japanese Yen is the standout performer in G10 FX, soaring after Bank of Japan Governor Ueda said the board will consider the “pros and cons” of a rate hike in December, his most hawkish signal to date, sending the yen and JGB yields soaring. 
• Bitcoin Plunges Below $86k: The crypto market was hit by another wave of selling, with Bitcoin falling over 5% after a DeFi exploit at Yearn Finance rattled market confidence. 
• Dollar Weakens as Fed Cut Bets Hold Firm: The U.S. Dollar is on the back foot, pressured by the strong Japanese Yen and the market’s unwavering belief in a December Fed rate cut, with odds now standing at a lofty 92%.
• Fed Rate Cut Bets Remain High: Despite the risk-off tone, the probability of a December Fed rate cut remains elevated at over 80%, providing a potential floor for risk assets. 
• Gold Hits 6-Week High, Silver new ATH: The precious metal continues to attract buyers, with spot prices climbing above $4,240 as dovish Fed expectations and geopolitical uncertainty provide strong support. Silver, the year’s standout performer (up nearly 100%), also jumped.
• Oil Bounces on OPEC+ Discipline: WTI Crude Oil is rallying over 1.7% after OPEC+ agreed to maintain its 2026 output quotas and extend its pause on production hikes through Q1 2026, signaling tighter-than-expected supply discipline.
• China’s Economy Loses Momentum: Weekend PMI data from China confirmed that both manufacturing and service sectors remain weak, weighing on the outlook for global growth. 
• Santa Rally Hopes Tested: After a strong historical track record for equities in December, the month is starting on a decidedly bearish note, testing investors’ hopes for a year-end “Santa Claus Rally.” 

Market Overview 

The market is kicking off the final month of the year on a decidedly negative note. The new month has kicked off with a return to the risk-averse mood that has been bubbling under the surface for weeks. U.S. stock futures are pointing to a sharp decline at the open, with the Nasdaq leading the losses, threatening to derail the “Santa Rally” before it even begins. The concerns about an AI bubble that drove last week’s volatility have not dissipated, and with the S&P 500 having just eked out a positive close for November, the market appears vulnerable to further downside. The sharp sell-off in Bitcoin is another clear sign that speculative froth is being removed from the market.

Index	Up/Down	%	Last
DJ Industrials	-241	-0.005	47502
S&P 500	-45.25	-0.0066	6814.25
Nasdaq	-210.75	-0.0083	25271.25
Russell 2000	-24	-0.0096	2481.1

The most significant development overnight came from Japan, where Bank of Japan Governor Kazuo Ueda’s hawkish comments have put a December rate hike firmly on the table. This is a major potential regime shift for global markets, as the era of ultra-cheap yen funding, a key pillar of support for global asset prices, may be coming to an end. While the market is still clinging to the hope of a December rate cut from the U.S. Federal Reserve—a view supported by Barclays and Goldman Sachs—the data calendar is becoming a major hurdle. With the October jobs report cancelled and the November report not due until after the Fed’s next meeting, policymakers will be flying blind, making a dovish pivot a far from certain outcome.

Economic Calendar 

With the U.S. government back online, the market is beginning to receive the backlog of delayed economic data. Today’s focus is on the U.S. ISM Manufacturing PMI. Data Released Earlier / Overnight: 

• China Official & Caixin PMIs (Nov): A mixed but mostly weak set of reports. The official manufacturing PMI remained in contraction for an eighth straight month, while the private Caixin survey also slipped back into contraction at 49.9. 
• China Official PMIs (Nov): The manufacturing PMI remained in contraction for an eighth month at 49.2, while the non-manufacturing PMI slipped into contraction for the first time since 2022 at 49.5.
• Australian Q3 Business Inventories: A significant downside surprise, with inventories falling -0.9% q/q, which will be a drag on the upcoming GDP report. 
• Japan Final Manufacturing PMI (Nov): Improved to 48.7 but remained in contractionary territory. 
• Japan Q3 Capex: A big miss, rising only +2.9% year-over-year (vs. 5.9% exp), but corporate profits surged by a massive 19.7%.

Today’s Economic Calendar:

• European Session: Final Manufacturing PMIs for the Eurozone and the UK.
• U.S. Session: The main highlight is the U.S. ISM Manufacturing PMI (Nov). The consensus is for a slight improvement to 49.0, but still in contraction. 
• U.S. Data: The U.S. government shutdown has ended, but the October jobs report will be combined with the November report, which will not be released until after the December Fed meeting.

Asset Class Spotlight: FX, Commodities, Bonds & Crypto

The big story in commodities is the powerful rally in Gold. Gold continues to shine, with spot prices climbing to a new six-week high above $4,240 an ounce. The metal is being supported by dovish Fed expectations, geopolitical uncertainty, and a softer risk tone. However, Silver has been the real star of the precious metals space this year – reaching a new all-time high of $57.86. While gold has gained an impressive 60% year-to-date, silver has quietly almost doubled, surging nearly 100% and significantly outpacing its yellow counterpart. Crude oil prices also rallied, with WTI jumping nearly 2% to trade near $59.50 a barrel, after OPEC+ agreed to maintain its 2026 output quotas and extend its pause on production hikes through Q1 2026. 

Asset	Up/Down	Unit / % Change	Last
WTI Crude	1.09	0.0186	59.64
Gold	20.00+	0.47%+	4274.7
EUR/USD	0.0009	0.0008	1.1607
USD/JPY	-0.78	-0.005	155.4
Bitcoin	-4788	-0.0524	86548
10-Year Note Yield	0.032	0.008	0.0405

The Japanese yen was the clear outperformer as hawkish BoJ commentary sent JGB yields surging and sparked a wave of short-covering. 

• USD/JPY: The pair fell sharply, dropping 0.5% towards 155.40 as Governor Ueda’s comments brought a December rate hike into play. The move marks a significant shift in tone and is providing strong support for the beleaguered yen. This is a major policy signal from the BoJ and could mark the beginning of a significant trend reversal for the Yen. A large $931M options expiry at the 155.00 level provides a major magnet and pivot point. 
• EUR/USD: The pair is trading flat around the key 1.1600 level. A large option expiry at this strike could act as a magnet for price action today as traders await this week’s Eurozone inflation data. A massive $2.2B options expiry at the 1.1600 strike is likely to anchor price action today.
• GBP/USD: The pound is trading on a softer note around 1.3225. While the market is pricing in a high probability of a Fed rate cut, a dovish Bank of England and ongoing fiscal concerns are likely to cap the cable’s upside. 
• AUD/USD: The Aussie is weaker after a surprise drop in Q3 business inventories, a negative input for this week’s GDP data. 

Cryptocurrencies: The crypto market was hit by another wave of selling, with Bitcoin plunging over 5% to trade below $86,000. The sell-off was reportedly triggered by a security incident at DeFi platform Yearn Finance, which undermined confidence and prompted a rush for the exits in an already fragile market. U.S. Treasury yields are slightly higher as investors adopt a cautious stance ahead of the week’s key data releases. The benchmark 10-year yield is trading around 4.05%, reflecting the ongoing uncertainty about the U.S. economic outlook. 

Looking Ahead 

Today’s trading will be dominated by the release of the U.S. ISM Manufacturing PMI. While the market is heavily skewed towards a December Fed rate cut, a surprisingly strong PMI print could challenge that narrative and add to the current risk-off mood. However, the bigger story for global markets is the developing situation in Japan. If the Bank of Japan does indeed hike rates in December, it could trigger a significant and potentially disorderly unwinding of the yen carry trade, a scenario that would have major ripple effects across all asset classes.

What to Watch

• The BoJ’s Hawkish Pivot: Governor Ueda’s comments are a potential game-changer. If the market continues to price in a December BoJ rate hike, it could trigger a massive and violent unwind of the popular Yen-funded carry trades, a major risk for global markets. 
• The “Santa Rally” at Risk: The combination of weak Chinese data, a hawkish BoJ, and renewed crypto turmoil is a significant headwind for the traditional year-end rally. December has historically been a strong month for stocks, but the early signs are bearish. 
• The Crypto Contagion: The exploit at Yearn Finance is another blow to the fragile confidence in the DeFi space. Traders will be watching for any signs of contagion and whether the sell-off in Bitcoin accelerates. 
• ISM as the Only Guide: In the absence of official jobs and inflation data, today’s ISM Manufacturing PMI report is now the most important economic release of the month. The market will be hyper-sensitive to the employment and prices paid components for any clues on the Fed’s path.