The Federal Reserve is about to cut interest rates, causing increased volatility in global capital markets, while cryptocurrencies are rising against the trend.

The Federal Reserve will hold a policy meeting this week, and market expectations for rate cuts are already fully reflected in asset prices. White House National Economic Council Director Jared Bernstein’s latest comments did not show a dovish bias, emphasizing that decisions should be data-driven. This stance dampened investors’ optimism about a easing cycle. According to the Chicago Mercantile Exchange FedWatch tool, the probability of a 25 basis point rate cut is about 89%, but this is already priced in by the market.

Trump Opens Nvidia Export to China, Tech Stocks Diverge Significantly

President Trump approved Nvidia’s sale of H200 AI chips to China, with the company earning a 25% share of the revenue. This marks a significant breakthrough for the world’s most valuable tech company in lobbying efforts with China, potentially restoring billions of dollars in overseas business. Stimulated by the news, Nvidia’s stock surged as much as 3.1% intraday, ultimately closing up 1.7%.

In contrast, other major tech stocks showed mixed performance. Microsoft rose 1.6%, Alphabet fell 2.3%, and Tesla declined 3.4%. This divergence reflects market differentiation in assessing various tech sub-sectors under policy changes.

Stock and Bond Gains Drive Fear Index Higher

The VIX fear index rose 8.25%, and the MOVE index increased 7.46%, indicating a significant rise in market volatility. The US 10-year Treasury yield rose to 4.196%, up 5.6 basis points; the 2-year yield increased to 3.608%, up 4.4 basis points. Overall, the yield curve remains upward-sloping amid rate cut expectations, reflecting concerns about long-term inflation.

Deutsche Bank Global Macro Research Head Reid expects Fed Chair Powell to emphasize a high threshold for further rate cuts early next year, implying a pause in rate reductions in the near term. If this forecast materializes, it could test the stock market.

Global Stock Markets Decline, Commodity Prices Under Pressure

The three major US stock indices all declined: Dow down 0.45%, S&P 500 down 0.35%, Nasdaq down 0.14%. The China Golden Dragon Index rose slightly by 0.08%. European markets performed relatively stably, with the UK FTSE 100 up 0.23%, France CAC 40 up 0.08%, and Germany DAX 30 up 0.07%.

Commodity markets came under clear pressure. WTI crude oil fell 2.14% to $58.83 per barrel, gold declined 0.17% to $4,190 per ounce, both breaking below recent key levels.

Cryptocurrencies Rise Against the Trend, Bitcoin Holds High Levels

Contrasting with the weakness of traditional assets, Bitcoin increased 0.27% in 24 hours, with the latest price at $92,699, demonstrating resilience. Ethereum rose 2.09% in 24 hours to $3,129. The relative strength of the crypto market reflects investor tilt toward alternative assets during the rate cut cycle.

The Australian dollar against the Hong Kong dollar experienced increased short-term volatility, with the 30-day forward rate reflecting market expectations of diverging global monetary policies.

Consumer Expectations Worsen, Unemployment Concerns Ease

The latest consumer expectations survey from the New York Fed shows that Americans’ inflation expectations for the next year remain steady at 3.2%. Notably, assessments of current household financial conditions have significantly worsened, with a higher proportion of respondents feeling their financial situation is worse than a year ago. The share of consumers expecting to be unable to pay minimum payments in the next three months rose from 13.1% in October to 13.7%.

Expectations of unemployment risk have eased, with the average expected unemployment rate over the next 12 months falling to 13.8%, the lowest since December 2024. Consumers also expect gasoline prices to rise 4.09%, food prices by 5.87%, medical costs by 10.08%, college tuition by 8.39%, and rent by 8.27% over the next year.

Global Forex Trading Hits Record Highs, Trump Tariffs Fuel Volatility

The Bank for International Settlements’ quarterly assessment reports that in April, global average daily forex trading volume reached $9.5 trillion, a 27% increase from the same month in 2022, setting a record high. Trump’s tariff policies have been a major driver of trading volatility, leading to an unexpected depreciation of the US dollar. This is partly due to hedging around tariff news and risk avoidance related to dollar exposure.

Overall forex trading volume increased over 25% compared to the last BIS survey in 2022, surpassing the peak during the March 2020 COVID-19 market turmoil.

Bridgewater’s Dalio Issues Warning: Global Economy in Peril

Hedge fund founder Ray Dalio warns that due to the convergence of debt, US political conflicts, and geopolitical cycles, the global economy will face greater risks in the next one to two years. He believes the market is in a bubble similar to 2000, rather than the period before the 1929 Great Depression.

Dalio points out that global debt burdens have exerted pressure on certain market sectors, with cracks appearing in private equity, venture capital, and refinancing debt. He predicts that as the US approaches the 2026 elections, political turmoil will intensify, potentially leading to more conflicts. Excessive concentration of high interest rates and market leadership further amplifies vulnerabilities.

Regarding the current AI boom, Dalio reiterates his view that it is in a bubble stage but advises investors not to rush for the exits due to high valuations.

ChatGPT Paid Users Surge Globally, Corporate AI Adoption Hits Record

OpenAI reports that ChatGPT has over 800 million weekly active users. Over the past six months, AI adoption in international markets has surged, with paid enterprise customers in Australia, Brazil, the Netherlands, France, and others growing more than 1.4 times annually.

Feedback from corporate employees indicates that using AI can save 40 to 60 minutes of work daily, with even higher time savings in data science, engineering, and communications—up to 60 to 80 minutes. Seventy-five percent of respondents say AI has improved the speed or quality of work output, and 75% have completed technical tasks previously unmanageable with AI.

Over the past year, ChatGPT Enterprise weekly message volume has increased about 8-fold, with the average employee sending 30% more messages. Use of advanced reasoning capabilities in enterprises has surged approximately 320 times over 12 months, with the fastest growth in tech, healthcare, and manufacturing sectors. OpenAI currently has over 1 million enterprise paid users, with ChatGPT workplace product paid seats reaching 7 million.

Google AI Glasses to Launch in 2026, Hardware Ecosystem Accelerates

Google announced it will launch its first AI glasses in 2026 to compete with Meta’s existing products. The company is developing two different categories: one with a display, and another focused on audio. Companies like Samsung Electronics, Warby Parker, and Gentle Monster are among the first hardware partners.

Google also outlined upcoming software upgrades for the Samsung Galaxy XR headset, including a new travel mode, enabling mixed reality devices to be used in cars and airplanes.

IBM Invests $9.3 Billion to Acquire Confluent, Accelerating Data Streaming Integration

IBM announced the acquisition of data streaming platform Confluent, with a deal valued at $9.3 billion. This reflects a trend of consolidation in enterprise software and highlights the strategic importance of real-time data processing capabilities in the AI era. IBM’s stock rose 0.4% on the news.

Apple Chip Executive Denies Departure Rumors, Reaffirms Commitment

Apple’s chip division head, Srouji, confirmed to the team that he will remain in his role, denying rumors of departure. Bloomberg previously reported that Srouji was considering leaving Apple, but in an internal memo, he emphasized pride in the team’s achievements in display, camera, sensors, chips, and batteries, and expressed love for his team and work at Apple.

Since joining Apple in 2008, Srouji has led teams developing the M-series chips for Mac and the A-series chips for iPhone, making him one of Apple’s most important executives.

JPMorgan Warns: Post-Rate Cut US Stock Rally May Stall

JPMorgan strategist Mislav Matejka and his team expect that after the Fed cuts rates, the recent rally in US stocks may stall due to profit-taking. While recent weeks have seen optimistic signals from policymakers and rising expectations for rate cuts, these are already fully priced in, and stocks have returned to high levels.

Investors may prefer to lock in gains by year-end rather than increase directional exposure. However, JPMorgan remains optimistic about the medium-term outlook, believing the Fed’s dovish stance will support stocks. Low oil prices, slowing wage growth, and easing US tariffs will allow the Fed to loosen monetary policy without fueling inflation. Other supportive factors include reduced trade uncertainty, improved Chinese economic prospects, increased fiscal spending in the Eurozone, and rapid AI adoption in the US.

Market Outlook

This week’s key events include the Reserve Bank of Australia interest rate decision and Governor Lowe’s press conference, US November NFIB Small Business Optimism Index, US October JOLTS job openings, EIA Monthly Short-Term Energy Outlook, and the US 10-year Treasury auction.