Trading Day: World Shivers on Japan Rate Chill

Global Markets React to Japan's Rate Hike Speculation

By Jamie McGeever

ORLANDO, Florida, Dec 1 (Reuters) - Global bond yields rose and stocks fell on Monday after Bank of Japan Governor Kazuo Ueda hinted that interest rates may rise later this month, cooling investor optimism around an expected U.S. rate cut and getting December trading off to a rocky start.

If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today.

1. Flurry of Fed dissents in coming meetings could posemarket, political risks 2. Hassett may be 'shadow Fed Chair' for five months: MikeDolan 3. BOJ to consider rate hike in December, governor says;yen, yields rise 4. China export controls push European firms to move supplychains 5. Blue Owl's teachable moment for investors and assetmanagers chasing yield and 'hot money'

Today's Key Market Moves

* STOCKS: Most major markets fall, except China/Hong Kong.Japan's Nikkei -2%, Germany's DAX -1%, Dow -0.9%. * SECTORS/SHARES: U.S. utilities -2.3%, healthcare -1.5%,energy +1%. Moderna -7%, Coinbase -5%, Strategy -3% (Strategy isdown nearly 60% in just two months). * FX: Dollar index at 2-week low, USD/JPY has biggest fallsince Oct 10 but recovers some ground. Bitcoin tumbles 7% below$85,000. * BONDS: JGB yields surge to new historic highs. U.S.Treasury yields up 8 bps at long end, curve bear steepens. * COMMODITIES/METALS: Silver leaps to new high of$58.83/oz. Oil +1% on Ukraine, Venezuela, OPEC.

Today's Talking Points

* Japan's Ueda scares the horses

A heavy wave of equity and bond selling in Japan rippled through global markets on Monday, as investors braced for a Bank of Japan rate hike on December 19. Interestingly though, for once the spike in JGB yields lifted the yen. Has the Japanese currency bottomed?

The prospect of an imminent rate hike intensifies the spotlight on JGBs, how much longer Japan's consumers and businesses can tolerate surging yields, and the fiscal-monetary policy nexus. Prime Minister Sanae Takaichi's planned fiscal stimulus may not be accompanied by her preferred monetary accommodation after all.

* High-ho, silver lining

The latest run-up in silver means the metal has now doubled in price so far this year. Silver hit a record high of $58.83 an ounce on Monday, up 104% from the $28.87 close on December 31. It is up as much as 20% in the last week alone.

Tight supply, the prospect of more Fed easing, investor diversification, and bullish momentum have all fueled the surge. Silver has shown remarkable resilience in recent weeks, consolidating and even strengthening when gold, stocks, crypto and other assets have retreated to varying degrees.

* Global manufacturing down in the dumps

Global growth may be holding up ok, but tariffs and trade tensions are taking their toll on manufacturing - the latest purchasing managers' index (PMI) figures show activity in the United States, euro zone, China and Japan contracted last month.

Factory activity in the U.S. has now shrunk nine months in a row, suggesting that President Donald Trump's plans to onshore and ultimately revive U.S. industry have yet to bear fruit. There are some bright spots - notably Britain and Italy - but overall it's a fairly gloomy picture.

What could move markets tomorrow?

* Japan consumer confidence (November) * South Korea inflation (November) * Euro zone inflation (November, flash) * Euro zone unemployment (October)

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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

(By Jamie McGeever; Editing by Bill Berkrot)