Strong vehicle purchases and online shopping supported a 0.7% month-on-month increase in US retail sales for November, exceeding expectations. Analysts state that the robust retail sales combined with the resurgence of inflation indicate that the Federal Reserve may pause rate cuts in January next year. Following the release of the data, the USD saw a short-term decline, and the increase in US Treasury yields narrowed.

On the eve of the Federal Reserve's interest rate meeting, market concerns over tariffs raised US inflation expectations for 2025. The forecast for next year’s core PCE inflation increased from 2.3% to 2.5%, and it is expected that the Fed will reduce rates three times next year, each by 25 basis points, with the year-end federal funds rate anticipated to be between 3.5% and 3.75%. Some institutions predict only two rate cuts next year, lower than the four hinted at by the Fed's September dot plot. Barclays stated that the Fed has a chance to stop quantitative tightening (QT) before the end of 2025.

In the Eurozone, UK wage growth exceeded expectations, with the average wage for the three months ending in October rising 5.2% year-on-year, above expectations and previous values. The market has reduced bets on the Bank of England cutting rates next year, with traders expecting a 55 basis point cut by the end of 2025, which is 17 basis points lower than before the data was released, marking the lowest since November 20. The likelihood of three rate cuts next year is less than 40%, and policymakers are expected to maintain the benchmark rate at 4.75% on Thursday. However, economists from asset management giant Vanguard believe the market has underestimated the extent of the rate cuts, predicting a 100 basis point cut by the Bank of England in 2025. Following the data release, the British Pound rose, while UK bonds weakened across the board.

German businesses lack confidence in future economic conditions, with the December business expectations index dropping from 87 to 84.4, compared to previous analyst forecasts of a slight increase. Amid ongoing economic malaise, the German government is attempting to reduce debt, cutting federal debt sales by 13% in 2025, leading to a broader rally in German 10-year bonds. UK bonds continue to be pressured by inflation, while German bonds are rising amid anticipated ECB rate cuts. The yield premium of UK bonds over German bonds temporarily widened to 228 basis points, nearing the highest level since 1990.

Additionally, Canada's inflation rate in November increased by 1.9% year-on-year, below expectations and previous values, marking the second month in three for being below the central bank's 2% target, which supports the central bank's dovish stance. Following a sudden announcement from Canada's finance minister, revealing internal government strife, the Canadian Dollar fell to a more than four-year low on Tuesday. Recently, due to threats of tariffs from Trump and political turmoil, the prospects for rate cuts have been bolstered by the favorable inflation rate, with the Canadian Dollar dropping over 7% this year.

Market risk aversion has increased, with US stock indexes all falling. The Dow started a consecutive decline after first closing above 45,000 points earlier this month, plummeting over 381 points on Tuesday, marking the first nine-day consecutive drop since the 1970s. All sectors broadly declined, with industrial, energy, and financial sectors leading the losses, while consumer discretionary, consumer staples, and healthcare sectors performed relatively well. Most chip stocks and AI concept stocks fell, with NVIDIA dropping nearly 4% before narrowing its decline to 1.22%. Tesla and Apple reached new highs, while Google turned downward after hitting a new high, and Broadcom closed down 3.91%.

• All three major US stock indexes fell. The S&P 500 Index closed down 23.47 points, a decrease of 0.39%, at 6050.61 points. The Dow Jones, closely related to the economic cycle, fell by 267.58 points, a drop of 0.61%, ending at 43449.90 points. The Nasdaq, which is heavily composed of tech stocks, fell by 64.83 points, a decrease of 0.32%, closing at 20109.06 points. The Nasdaq 100 Index fell by 0.43%. The Nasdaq Technology Market Capitalization Weighted Index (NDXTMC), which measures the performance of the Nasdaq 100 technology component stocks, fell by 0.76%. The Russell 2000 Small Cap Index, which is more sensitive to the economic cycle, fell by 1.18%. The volatility index VIX rose by 8.03%, reaching 15.87.

All major US stock indexes fell, with small-cap stocks leading the decline, and a small wave of buying appeared in the closing session, marking the Dow's ninth consecutive drop.

• The US industry ETFs almost all suffered losses. The Regional Banks ETF fell by 2.35%, the Banks ETF declined by 2.07%, the Semiconductor ETF decreased by 1.3%, and the Energy Industry ETF, Financial Industry ETF, Technology Industry ETF, Internet Stocks Index ETF, Global Technology Stocks Index ETF, among others, also fell by up to 0.74%. The Consumer Discretionary ETF and Biotechnology Index ETF, however, closed up more than 0.3%.

• In terms of investment research strategy, global annual trading volume surpassed 3 trillion USD, and merger bankers believe the coming year under Trump's presidency will be better. Bank of America stated that the "Seven Sisters" of US stocks are still expected to perform outstandingly by 2025. Fund managers have reduced cash holdings to record lows, leading to a substantial inflow of funds into the US stock market, triggering a signal that Bank of America believes may indicate a global stock sell-off. In December, the proportion of cash in total assets managed dropped to 3.9%, and historically, after this phenomenon, the MSCI Global Index tends to decline. Since 2011, following sell signals from Bank of America, the MSCI Global Index has averaged a decline of 2.4% over the following month. Surveys indicate that fund managers are most optimistic about a growth rebound in China in 2025, while the global trade war is viewed as the most pessimistic catalyst.

• The "Seven Sisters" of Technology had mixed performance. (1) Tesla rose over 4.5% to set a new all-time high and closed up 3.64%, with Mizuho raising the Target Price of Tesla from $230 to $515, upgrading its rating from neutral to outperform. (2) Google's Class A shares rose over 2.4% to reach an all-time high before closing down 0.63%, with reports stating that Alphabet's subsidiary Waymo will enter the Japanese autonomous taxi market. (3) Apple closed up 0.97%, creating another all-time high during the trading session. (4) "Metaverse" Meta dropped by 0.77%. (5) Microsoft rose by 0.64%. (6) Amazon fell by over 2.1% but narrowed its decline to 0.76%. (7) NVIDIA, after falling nearly 3.9%, narrowed its loss to 1.22%, with NVIDIA set to release its next-generation Blackwell architecture RTX 50 series graphics cards on January 7, Beijing time. The RTX 5090 graphics card will feature a record 32GB of GDDR7 memory. NVIDIA also launched an AI supercomputer priced at only $249, with generative AI performance improving by up to 1.7 times.

• Chip stocks fell broadly. The PHLX Semiconductor Index closed down 1.64%, at 5169.79 points. The SOXX sector ETF fell 1.41%. The double long ETF for NVIDIA fell 2.53%. Marvell Technology dropped 10.04%, Broadcom fell 3.91% distancing from its historical high, Microchip Technology declined by 1.34%, and Bank of America Securities downgraded Microchip Technology's rating from "neutral" to "underperform", lowering its Target Price from $80 to $65. Synopsys fell 1.96%, Wolfspeed dropped 1.88%, Intel fell 1.87%, Arm Holdings dropped 1.52%, AMD fell 1.32%, Taiwan Semiconductor dropped 0.77%, KLA Corp fell 0.19%, Qualcomm rose 0.02%, Micron Technology rose 0.31%, ASML Holding rose 1.77%, and ON Semiconductor rose 1.96%.

• Most AI concept stocks declined. BigBear.ai rose 13.71%, Serve Robotics rose 11.35%, BullFrog AI rose 9.79%, Super Micro Computer rose 1.08%, while SoundHound AI, owned by NVIDIA, fell 1.52% from its all-time high, C3.ai dropped 0.19%, CrowdStrike fell 3.03%, Palantir declined 1.8%, and Oracle fell 0.89%.

• China Concept Stocks rose overall. The Nasdaq Golden Dragon China Index closed up 1.97%, at 6964.23 points. Among ETFs, the FTSE China 3x Long ETF (YINN) closed up 4.68%, the China Technology Index ETF (CQQQ) closed up 1.15%, the Deutsche Bank Harvest CSI 300 ETF (ASHR) closed up 1.14%, the China Concept Internet Index ETF (KWEB) closed down 1.33%, and the FTSE China 3x Short ETF (YANG) closed down 4.89%. The FTSE A50 Futures rose 0.42% in the continuous night session, closing at 13468.000 points.

• Among the popular China Concept Stocks, Planet Image International rose by 24.62%, Dingdong increased by 7.07%, Baidu went up by 2.08%, and the company applied for a short play trademark, further focusing on short play business. Atour, Bilibili, Daqo New Energy, Weibo, and Tencent Music gained up to 4.6%, Qifu Technology, XPeng, H World Group, ZTO Express, Full Truck Alliance, and ZAI LAB increased by about 3.9%, Trip.com, Li Auto, NIO, Noah Holdings rose by more than 2.8%, YUM CHINA, EHang, JD.com, Vipshop, Autohome, and Alibaba gained over 1.7%. KE Holdings, Kanzhun, NetEase, DouYu, and Canadian Solar also saw increases of more than 0.8%, while GDS Holdings, JinkoSolar, and New Oriental experienced declines of over 0.8%.

• Bitcoin surged to $0.108 million, reaching a historical high, then plummeted over $2000, leading to a downturn in cryptocurrency concept stocks. The 'meme stock' in cryptocurrency, Ideanomics, rose by 57.14%, Riot Platforms fell by 0.43%, Bitdeer Technologies fell by 8.3%, and Canaan fell by 3.88%. Cryptocurrency exchange giant Coinbase fell by 1.16%, as it delisted wBTC due to unacceptable risks brought by Sun Yuchen. The 'heavy holder' of Bitcoin, MSTR, fell by 5.41%, and BTC Digital fell by 14.48%.

• Other key stocks include: (1) Pharmaceutical giant Pfizer rose by 4.67%, and the company expects revenue of $61 billion to $64 billion in 2025. (2) Quantum Computing concept stocks rose by 51.53%, triggering a trading halt as the company announced previous acquisition of a NASA contract. Quantum rose over 33.5% before closing up 1.93%.

European stock markets closed lower on Tuesday, with the European Banking Index down 1.4%, leading the declines, while tech stocks rose by 0.61%. The Bank of England will hold a meeting on Thursday, and UK stocks fell by 0.81%. The shares of Dutch coffee manufacturer JDE Peet's dropped over 7% due to production cost pressures from soaring coffee bean prices hitting nearly a 50-year high.

• The pan-European STOXX 600 index closed down 0.42% at 513.66 points. The Eurozone STOXX 50 index closed down 0.09%. The FTSE All-Share 300 index closed down 0.38%.

• The highest banking regulatory authority of the European Central Bank believes that the banking sector will exhibit resilience as interest rates decline. The chair of the ECB Supervisory Board stated that the European banking sector is 'strong,' with good capital adequacy ratios, profitability, and sound liquidity indicators.

• The German DAX 30 index closed down 0.33%. The French CAC 40 index closed up 0.12%. The Italian FTSE MIB index closed down 1.22%. The Dutch AEX index closed down 0.20%, and the UK FTSE 100 index closed down 0.81%. The Spanish IBEX 35 index closed down 1.62%.

The U.S. Treasury yield curve remained stable, with CDS spreads narrowing. After the release of wage data in the UK, traders cut back on bets for a rate cut by the Bank of England, leading to a broad weakening of UK bonds, with the UK 10-Year Treasury Notes Yield briefly rising to its highest level in nearly five weeks. The 30-Year Treasury Notes Yield rose by 6 basis points to 5.05%, its highest in over a year. The UK/German 10-Year Treasury Notes Yield spread widened by 9 basis points to 229 basis points, the widest since 1990.

• U.S. Treasury: At the close, the yield on the benchmark 10-Year U.S. government bond fell by 0.20 basis points to 4.3948%, trading within a range of 4.4383%-4.3711% during the day. Before the release of U.S. retail sales data at 21:30 Beijing time, it had refreshed the daily high. The 2-Year Treasury yield fell by 0.64 basis points to 4.2426%, trading within a range of 4.2827%-4.2321% during the day.

US Treasury yields declined slightly across the board.

• JPMorgan's US Treasury customer survey shows that for the week ending December 16, the short position ratio decreased by 2 percentage points, market sentiment turned neutral, the long position ratio remained unchanged, and the neutral ratio reached a one-month high. Husain, chief of Fixed Income at US asset management giant T. Rowe Price managing $180 billion in assets, predicts that the US fiscal situation will deteriorate, and Trump's policies may increase inflation, leading the 10-year US Treasury yield to reach 5% in the first quarter of 2025, and then it may rise above 6% for the first time in over twenty years.

• European Bonds: At the end of the European market, the benchmark 10-year German government bond yield in the Eurozone fell by 1.7 basis points, reported at 2.230%. The two-year German bond yield rose by 0.2 basis points, reported at 2.051%. The UK 10-year government bond yield rose by 8.2 basis points, and the two-year UK bond yield rose by 9.6 basis points. The French 10-year government bond yield fell by 1.0 basis point, and the Italy 10-Year Treasury Notes Yield fell by 1.4 basis points.

The USD index rose slightly by less than 0.1%, benefiting from safe-haven sentiment. The Japanese Yen and Swiss Franc performed the best, with the Yen rising by 0.4% nearing 153. The Canadian Dollar hit a four-year low since the pandemic, and the Brazilian Real appreciated by 0.4% against the USD after the country’s central bank intervened. Bitcoin surged past $0.108 million to reach a new historical high before retreating.

• USD: The USD index DXY rose by 0.08%, reported at 106.946 points, bouncing back after refreshing the daily low to 106.698 points at 08:54 Beijing time, rising to a new daily high of 107.084 points at 18:27, and then retracing gains. The Bloomberg Dollar Index rose by 0.07%, reported at 1289.48 points, with a trading range of 1286.83-1290.51 points during the day.

The USD fluctuated in a narrow range.

• Non-USD currencies: The Euro fell by 0.20% against the USD, reported at 1.0492, the British Pound rose by 0.24% against the USD, reported at 1.2713, the USD fell by 0.16% against the Swiss Franc, reported at 0.8928; among commodity currencies, the Australian Dollar fell by 0.55% against the USD, and the New Zealand Dollar fell by 0.46% against the USD, while the USD rose by 0.48% against the Canadian Dollar. The Swiss Franc came under pressure after the Swiss National Bank lowered interest rates by 50 basis points last week, as the market focused on the Federal Reserve, with the Franc touching a five-month low against the USD, marking its eighth consecutive day of decline, the longest streak since January.

• The Japanese Yen: The Yen traded at 153.54 against the USD at the end of the trading session, with the USD/JPY rising by 0.40%, the intraday trading range was 154.35-153.16 Yen.

• Offshore RMB (CNH): Offshore RMB (CNH) rose 42 points against the US dollar at the close, reported at 7.2881 yuan, trading in a range of 7.2963-7.2851 yuan during the day.

• Cryptos: The largest cryptocurrency, Bitcoin, rose 0.40% at the close, reported at 0.107 million dollars, and at 22:57 Beijing time (during the initial US stock market), it surged to nearly 0.109 million dollars, setting an intraday historical high, before quickly plummeting and turning negative, nearing the day's low of 0.106 million dollars set at 07:34 (during the initial Asia-Pacific trading). The second-largest, Ethereum, fell 3.13% at the close, reported at 3945.50 dollars.

Bitcoin broke through 0.108 million dollars.

Investors remain cautious ahead of the Federal Reserve's interest rate decision, with expectations of rate cuts reduced and concerns over oil demand. Coupled with risk-averse sentiment, this caused oil prices to decline on Tuesday, with Brent crude oil falling about 1%. NY natural gas futures rose more than 2.9%, UK natural gas futures rebounded more than 3%, and Dutch natural gas futures rose more than 5%. US API crude oil inventories sharply decreased by about 4.7 million barrels last week, which led to an increase in oil prices:

• Crude Oil: WTI January crude oil futures closed down 0.63 dollars, a decline of 0.89%, reported at 70.08 dollars/barrel, marking a pullback for the second consecutive trading day.

• Brent Oil: Brent February crude oil futures closed down 0.72 dollars, a decline of 0.97%, reported at 73.19 dollars/barrel.

• Natural Gas: January natural gas futures in the US closed up 2.92%, reported at 3.3080 dollars/million British thermal units. TTF benchmark Dutch natural gas futures rose 5.41%, reported at 41.920 euros/MWh. ICE UK natural gas futures rose 3.26%, reported at 103.660 pence/kcal.

Oil prices fell again.

Traders expect a slowdown in the pace of Fed rate cuts in 2025, leading to a decline in gold prices, with futures gold falling about 0.3% at the close.

• Gold: COMEX gold futures fell 0.28% at the close, reporting $2662.40 per ounce, hitting a daily low of $2646.10 at 22:13 Beijing time (after US retail sales data was released and before US stock market opened). Spot gold fell 0.27% at the close, reporting $2645.67 per ounce, trading in the range of $2658.72-$2633.16 throughout the day.

• Silver: COMEX silver futures fell 0.18% at the close, reporting $30.980 per ounce, hitting a daily low of $30.615 at 19:00 (before US retail sales data was released). Spot silver rose 0.06% at the close, reporting $30.5408 per ounce.

Gold prices fell.

• London industrial metals fell across the board, with nickel closing down over 1%, while copper, aluminum, zinc, and tin all closed down less than 1%: London copper closed down $73, reporting $8990 per ton. COMEX copper futures fell 1.04%, reporting $4.1475 per pound. London aluminum fell $24, reporting $2542 per ton. London zinc fell $20, reporting $3036 per ton. London lead fell $15, reporting $1986 per ton. London nickel fell $205, reporting $15503 per ton. London tin fell $199, reporting $29047 per ton. London cobalt remained flat, reporting $24300 per ton.

The following updates were made before 23:30 Beijing time on December 17.

On the eve of the Fed's interest rate meeting, traders are reflecting on the outlook for Fed rate cuts in 2025, worried that FOMC's rate cut space next year is being squeezed by persistent US inflation pressures. Additionally, the US retail sales data for November released on Tuesday showed a month-on-month increase of 0.7%, better than economists' expectations, marking the highest since September. Analysts believe that the strong retail sales data, combined with a rise in inflation data in recent months, indicates that the Fed may pause rate cuts in January next year.

US stock indexes fell across the board, with the Dow starting a continuous decline after first closing above 45000 points earlier this month, falling over 270 points on Tuesday and likely facing the first nine consecutive declines since the 1970s, soon to be recorded in history. Technology stocks, chip stocks, and most AI concept stocks fell, with NVIDIA at one point dropping over 3.7%, while Tesla, Google, and Apple reached new highs, and Broadcom fell nearly 6%.

• The three major US stock indices fell together. The S&P 500 Index briefly dropped over 0.5%. The Dow, closely related to the economic cycle, briefly fell more than 0.6% or 276 points. The Nasdaq, which has a majority of tech stocks, briefly dropped nearly 0.7%.

• In the early trading of the Industry ETF, US stocks broadly declined, with the Energy Sector ETF down 1.34%, the Penghua Guozheng Semiconductor Chip ETF down 1.2%, the Technology Sector ETF down 0.75%, and the Financial Sector ETF also down about 0.7%, while the Biotech Index ETF rose over 0.8%.

• "The 'seven sisters of technology' had mixed performances. Tesla briefly rose over 4.5% to set a new historical high, and Mizuho raised Tesla's target price from $230 to $515, upgrading its rating from neutral to outperform. Google A briefly rose over 2.4%, and Apple rose nearly 0.8%. After rising over 1.3%, Meta dropped over 0.3%, while Microsoft briefly fell over 0.4%. Amazon briefly dropped over 2.1%, and NVIDIA briefly fell over 3.7%. NVIDIA will release the next-generation RTX 50 series graphics cards based on the new Blackwell architecture on January 7 next year in Beijing time. The RTX 5090 graphics card will be equipped with a record-breaking 32GB of GDDR7 memory. During intraday trading on December 16, the company briefly retraced over 10% from its historical closing high, entering a technical retracement range.

• Chip stocks broadly declined. The PHLX Semiconductor Index briefly dropped over 2%. The two times long ETF for NVIDIA briefly fell over 5%. Marvell Technology briefly dropped over 8%, Broadcom briefly fell nearly 5.8%, Arm Holdings briefly dropped over 4.6%, while ON Semiconductor briefly rose over 6.2%, and ASML Holding briefly rose over 3%. Microchip Technology rose over 1% before dropping over 0.4%. Bank of America Securities downgraded the rating of chip manufacturer Microchip Technology from 'neutral' to 'underperform', cutting the target price from $80 to $65.

• Most AI concept stocks fell. BigBear.ai briefly rose over 8%, Super Micro Computer briefly rose over 3%, while SoundHound AI, held by NVIDIA, briefly dropped over 9%, and Palantir briefly fell over 4%.

• Most China Concept Stocks rose. The Nasdaq Golden Dragon China Index briefly rose over 0.5%. Among popular China Concept Stocks, Zhihu rose nearly 19.5% but gave back most of the gains, Bilibili briefly rose over 5%, Daqo New Energy briefly rose over 4.3%, while MINISO briefly dropped over 5.2%.

• Among other assets: Bitcoin rose over 1.8%, reaching a new intraday historical high above $0.108 million.

The following are updates before 22:00.

On Tuesday, December 17, the market awaits a series of interest rate decisions from central banks around the world, including the Federal Reserve, with nearly 100% expectation of a 25 basis point rate cut by the Fed. European and Asian stock markets generally fell, and gold prices also decreased.

Later today, the USA will release the retail sales data for November. In pre-market trading, some China Concept Stocks rose.

The Japanese yen fell below the 154 mark against the dollar overnight, ending a six-day decline. The pricing in the Japanese swap market shows that traders expect less than a 20% probability of a Bank of Japan rate hike in December.

In pre-market trading, some China Concept Stocks rose, with Bilibili up 0.41%, iQIYI rising nearly 2%, and Tencent Music increasing over 1%.

U.S. stock index futures declined broadly, with S&P 500 futures down 0.31%, Nasdaq futures down 0.24%, and Dow futures down 0.38%.

European stocks fell, with the Euro Stoxx 50 index down 0.07%, German DAX index down 0.21%, UK FTSE 100 index down 0.75%, and France CAC40 Index down 0.12%.

The yield on Japan's 10-Year Treasury Notes briefly touched 1.1%, the highest level since July.

The dollar fell against the yen, currently at 154.09; the Swiss Franc reached a five-month low against the dollar, with USD/CHF briefly rising 0.2% to 0.8959.

The spot price of gold fell by 0.5%, currently reported at 2639.69 USD/ounce.

The WTI Crude Oil daily drop reached 1%, reported at 69.56 USD/barrel.

U.S. stock index futures declined broadly, with S&P 500 futures down 0.31%, Nasdaq futures down 0.24%, and Dow futures down 0.38%.

European stocks fell, with the Euro Stoxx 50 index down 0.07%, German DAX index down 0.21%, UK FTSE 100 index down 0.75%, and France CAC40 Index down 0.12%.

In pre-market trading, Bilibili is up by 0.41%.

The USD is trading lower against the Japanese Yen, currently reported at 154.09.

The spot price of gold fell, currently reported at 2639.69 USD/ounce.