Global markets surged toward their strongest monthly performance since May, driven by optimism about robust U.S. economic growth and enthusiasm for artificial intelligence (AI) investments. This rally comes despite lingering concerns over political instability and economic slowdowns in Europe. Meanwhile, U.S. President Donald Trump has announced plans to impose significant tariffs—25% on all imports from Mexico and Canada and an additional 10% on Chinese imports—once he assumes office in January. This move could have broad repercussions for Asian economies and export-heavy regions like the eurozone, particularly Germany.

Asia-Pacific Markets
Trading in the Asia-Pacific region was initially subdued due to the Thanksgiving holiday in the U.S., but unexpected inflation data out of Tokyo spurred significant market activity. The Japanese yen strengthened sharply, appreciating 1.1% against the U.S. dollar. This drove the USD/JPY exchange rate to a six-week low, breaking below the 150-yen mark per dollar. Investors are increasingly betting on the Bank of Japan (BoJ) raising interest rates in December. Current market projections suggest a 60% probability of a 0.25% hike, which would bring the benchmark rate to 0.5%—the highest level since 2008. Such a move would mark a shift in the BoJ's traditionally dovish stance, reflecting efforts to combat persistent inflationary pressures.

European Markets
European equities remain under pressure from tariff-related concerns and a subdued economic outlook. However, these challenges are somewhat offset by expectations of monetary easing from the European Central Bank (ECB).
The euro has depreciated over 3% against the dollar this month, trading at $1.058.
German government bond yields have fallen for four consecutive weeks, signaling anticipation of further rate cuts. Market participants have largely priced in a 25-basis-point cut by the ECB in December, which would bring rates to 3%. However, hawkish remarks from ECB board member Isabel Schnabel this week have tempered speculation of a larger, 50-basis-point reduction.

American Markets
U.S. markets saw a reprieve from recent turbulence, with 10-year Treasury yields dropping to 4.24%—down 17 basis points for the week. This decline followed Trump’s nomination of hedge fund manager Scott Bessent for Treasury Secretary, alleviating fears of unchecked fiscal spending. However, Trump's proposed tariffs on imports from Mexico, Canada, and China could push U.S. inflation higher, complicating the Federal Reserve’s monetary policy decisions. While Fed officials have struck a cautious tone regarding future rate cuts, markets still anticipate a 25-basis-point reduction in December, which would bring the federal funds rate down to 4.25%-4.50%.