Core Viewpoint - The Bank of Japan may raise interest rates three more times during Governor Ueda's term until early 2028, potentially reaching 1.5% [1][2] Group 1: Interest Rate Projections - The next interest rate hike is expected around June or July 2024, with an initial increase to 1.0% [1] - If the U.S. economy remains strong and domestic inflation stays above the 2% target, the Bank of Japan could implement two rate hikes in the fiscal year starting April 2026 [2] - The central bank's internal estimate for the neutral interest rate is around 1.75%, and raising rates to 1.5% would provide room for future cuts [1][2] Group 2: Political and Economic Challenges - The process of normalizing monetary policy may become more complex as rates approach neutral levels, with potential political resistance from government officials [3] - The recent rate hike to 0.75% was reportedly agreed upon by high-ranking government officials, indicating a level of political support for the Bank of Japan's actions [3] Group 3: Inflation and Fiscal Policy Concerns - Japan's inflation rate has exceeded the central bank's 2% target for nearly four years, with businesses passing on rising costs to consumers [4] - The government's large fiscal stimulus plan, aimed at alleviating household cost pressures, may inadvertently accelerate inflation [4][5] - Concerns over fiscal discipline could lead to rising bond yields and further depreciation of the yen, undermining monetary policy efforts to stabilize prices [5]

Core Viewpoint - U.S. stock futures showed positive movement on Tuesday after a significant selloff in the previous session, indicating potential optimism for December, a historically strong month for markets [1] Group 1: Market Performance - Futures for the Dow Jones Industrial Average increased by 50 points, or 0.1%, following a drop of 427 points on Monday, closing at 47,289 [1] - S&P 500 futures rose by 0.3%, while contracts tracking the tech-heavy Nasdaq increased by 0.4% [1] Group 2: Market Sentiment - The previous day's decline in stocks was attributed to weakened risk sentiment, highlighted by a substantial selloff in Bitcoin and other cryptocurrencies [1] - The anticipation of a potential interest-rate hike in Japan, which could lead to significant Japanese investments moving abroad, resulted in a spike in U.S. Treasury yields, further contributing to the equity selloff [1]

Core Insights - Crypto-related stocks experienced a decline as Bitcoin (BTC) fell towards $84,000 during U.S. morning hours, impacting major companies in the sector [1] - The overall market sentiment was affected by signals of potential interest rate hikes from the Bank of Japan, leading to a broader pullback in risk assets [3][4] Company Performance - Shares of Coinbase (COIN), Gemini (GEMI), and Galaxy Digital (GLXY) dropped nearly 6% [1] - Crypto mining stocks such as MARA Holdings (MARA), Riot Platforms (RIOT), and Hive Digital (HIVE) saw declines between 7% and 9% [1] - MicroStrategy (MSTR) fell 11% to its lowest level since October 2024 after announcing a new cash reserve of $1.44 billion and reducing its 2025 profit outlook [1] Broader Market Impact - American depositary receipts of Metaplanet (MTPLF) declined by 10%, while KindlyMD (NAKA) and American Bitcoin (ABTC) fell by 9.9% and 6.7%, respectively [2] - Ether-focused companies like BitMine (BMNR) and SharpLink Gaming (SBET) experienced losses exceeding 10%, alongside Solana-centric firms DeFi Development (DFDV) and Solana Company (HSDT) [2] - The Nasdaq index dropped almost 1%, and the S&P 500 Index fell by 0.3% during the early session [3] Market Sentiment - The unexpected news of potential rate hikes from the Bank of Japan surprised many traders, contributing to the decline in risk assets [4] - Cryptocurrency continues to be viewed as a risk-on asset class, reflecting macroeconomic events continuously [4]