Expectations of a rate hike in Japan have caused global market turbulence, with risk assets under pressure. Bitcoin briefly dropped below $85,000.

In the first full trading week after Thanksgiving, global financial markets once again experienced volatility after a hawkish signal from the Bank of Japan. Risk assets were generally under pressure, with an increase in demand for safe-haven assets. At the same time, Japanese government bond futures significantly weakened as the market speculated that the Bank of Japan would raise interest rates at the December meeting. BOJ Governor Haruhiko Kuroda made a speech, stating that the committee would "discuss the pros and cons of raising rates," further strengthening market expectations for a hawkish stance. After Kuroda's speech, the global cryptocurrency market quickly reacted, with Bitcoin falling below $85,000 at one point. BTC Markets analyst Rachael Lucas pointed out, "Bitcoin is no longer just focused on the Federal Reserve, now the interest rate trends of central banks worldwide can trigger market volatility." The yield on Japan's 2-year government bonds rose above 1% on Monday for the first time in 17 years, while the 10-year yield briefly reached a high point since 2008. This rapid change spilled over into global bond markets, driving the US 10-year Treasury yield up 3 basis points to 4.04%, with rates in Europe and New Zealand also rising in sync. The probability of a rate hike in Japan on December 19 has been raised from less than 25% a week ago to about 80%. Analysts pointed out that Japan is one of the largest cross-border bond investors globally, and if domestic rates rise, it will prompt Japanese institutional investors to withdraw funds from higher-yielding foreign bonds (including US bonds) and reallocate them to domestic assets. However, due to strong expectations of a rate cut by the Federal Reserve before the end of the year, the rise in bond yields is capped, with US Treasury yields still fluctuating around 4%. Last week, New York Fed President Williams indicated that there was room for a rate cut in the short term, leading benchmark yields to briefly fall below that level. According to interest rate market pricing, the probability of the Federal Reserve cutting rates again at the December meeting is about 80%. This expectation heated up over the weekend, as President Trump stated that he has decided on the next Fed chair and market consensus is that Kevin Warsh, Director of the White House National Economic Council, is the leading candidate. Sources said that both Warsh and Trump favor a more aggressive rate-cutting path. Investors are also watching for the release of the November manufacturing data by the Institute for Supply Management (ISM). Suichestrategist Evelyne Gomez-Liechti said that if payment prices drop while the overall index improves slightly, "it would strengthen the bearish pressure in the current market." On Monday, the three major US stock indices opened lower, with the Nasdaq falling 0.67%, the S&P 500 down 0.52%, and the Dow down 0.5%. Meanwhile, safe-haven assets strengthened: the yen rose to around 155.5, and spot gold reached a six-week high, touching $4,264.61 at its peak. Japans ultra-low interest rates have long been at the core of popular carry trades globally: investors borrow yen at low costs to invest in higher-yielding risk assets. City Index senior market analyst Fiona Cincotta mentioned that Kuroda's rate hike implication might cause concerns about carry trades being unwound quickly: "These concerns have been present in the market for some time, but Kuroda's statement worsened risk sentiment on Monday."