US & Global Markets Face Uncertainty Ahead of Fed & BOJ Moves

Liquidity remains tight as markets brace for policy shifts and carry-trade volatility

Key Takeaways

Global liquidity is tight, with lingering crypto drawdown effects
BOJ rate comments spurred US equity & BTC sell-offs, yen carry-trade risk
Consumer spending & travel remain strong, with record sales & TSA throughput

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Digital Asset Commentary

Macro conditions remain challenging and uncertain. Global liquidity, judging by the price action in equities and Bitcoin, still appears insufficient to provide a sustained lift to asset prices. There may also be some lingering effects and rebalancing pressure from the crypto drawdown on 10/10.

After concerns about AI spending were eased by NVDA’s earnings call, markets are now reacting to BOJ Governor Ueda’s comments suggesting a possible December rate hike. US equities and BTC subsequently sold off in tandem last night. These developments may further accelerate a yen carry-trade unwind, similar to the sharp bearish momentum seen in August 2024. As the carry trade reverses, risk sentiment typically dries up and can spill over across assets.

In the US, rate expectations remain skewed toward a cut at the 12/10 meeting, and Fed Chair Powell’s remarks tonight at 8 PM EST may offer insight into how market pricing aligns with his own outlook. President Trump has also stated that he has selected the next Fed Chair and emphasized his expectation for rate cuts.

Despite ongoing narratives around a weakening consumer or a K-shaped economy, aggregate Black Friday sales reached a record $11.8 billion, up 9.1% from last year, according to Adobe Analytics. Cyber Monday is projected to add another $14.2 billion in online sales. While some reports point to fewer in-store visits and fewer items purchased per trip, overall spending remains strong.

Travel activity is also holding up. TSA throughput is largely in line with 2024 levels, and the earlier dip related to the US government shutdown and ATC shortages has fully reversed. Yesterday marked the busiest travel day ever recorded, with 3.13 million passengers screened.

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