Global markets decline amid risk aversion and ahead of key U.S. data

Sell-offs hit equities and cryptocurrencies as investors assess inflation, consumer trends, and potential central-bank moves. Spotlight on the Bank of Japan and the Fed: what comes next?

Global equities opened the week lower, reflecting a marked resurgence in risk aversion ahead of U.S. economic data due in the coming days. S&P 500 futures fall as much as 0.8%, while Nasdaq 100 futures drop more than 1%, with Europe also heading toward a weak open. The crypto sector faces heavy pressure: Bitcoin slips 6% below the $86,000 level and Ether retreats more than 7%.

In Asia, the regional index declines 0.4%, weighed down by Japanese markets. The yen strengthens after Bank of Japan Governor Kazuo Ueda signaled the possibility of an imminent rate hike, pushing two-year yields to their highest level since 2008.

This week will be crucial in shaping the outlook for U.S. monetary policy heading into 2026, with inflation and consumer data under scrutiny and markets still pricing in a Fed rate cut in December. Meanwhile, uncertainty is also rising around future Fed leadership following comments by President Donald Trump about a potential new nominee.

In commodities, WTI crude advances after OPEC+ confirmed its production pause, while metals such as silver and copper gain ground. In China, a rally in mining stocks supports the start of December despite continued contraction in manufacturing activity.

BOJ and Fed: markets await potential rate decisions

The Bank of Japan is heading into a pivotal meeting on December 19, with Governor Ueda stating he will assess the “pros and cons” of a rate increase in light of economic conditions, inflation, and global markets. Traders now assign a 64% probability to a hike, buoyed by Ueda’s explicit reference to that date—a signal reminiscent of last year, when a similar hint preceded actual policy tightening.

In the United States, attention is focused on upcoming consumer data and other indicators ahead of the December 9–10 FOMC meeting. Internal discussions are expected to center on labor-market conditions and the likelihood of a third consecutive rate cut. Markets have almost fully priced in a quarter-point reduction, helped by New York Fed President John Williams’ openness to further easing.

On the political front, anticipation is building around the announcement of the next Fed Chair. According to Bloomberg sources, White House adviser Kevin Hassett is seen as the frontrunner, though he has not confirmed. Treasury yields show limited movement, while the week will bring new readings on employment, manufacturing activity, and industrial production. According to Tom Essaye (Sevens Report), current indicators still support a soft-landing scenario, though uncertainties remain elevated.

Andrea Pelucchi