Japan’s economy expanded at an annualized 2.8% in the October-December quarter, surpassing market expectations, as robust capital spending and resilient consumer demand supported growth, government data showed on Monday.

The stronger-than-expected performance reinforces optimism about the country’s economic recovery, even as trade uncertainties persist.

The latest gross domestic product (GDP) figures outpaced a 1.0% growth estimate from a Reuters poll and followed a revised 1.7% expansion in the previous quarter. Quarterly, GDP grew 0.7%, beating forecasts of 0.3%.

Japan’s economy: domestic demand drives growth

Private consumption, which makes up more than half of Japan’s economy, rose 0.1%, defying projections of a 0.3% decline.

While wage growth and household spending have shown improvement, analysts remain cautious about inflationary pressures weighing on personal consumption.

Capital expenditure, a key driver of business investment, increased 0.5% in Q4, reversing a decline in the previous quarter but missing the 1.0% growth forecast.

Meanwhile, net external demand—the difference between exports and imports—contributed 0.7 percentage points to GDP, bouncing back from a negative impact in the July-September period.

BOJ’s policy outlook remains in focus

The stronger economic data may bolster the Bank of Japan’s (BOJ) plans to gradually tighten monetary policy.

The central bank has been closely monitoring consumption and wage trends to assess the economy’s strength and determine the timing of further interest rate hikes.

last week, Bank of Japan (BOJ) Governor Kazuo Ueda cautioned that persistently high food prices could influence inflation expectations, reinforcing the central bank’s careful approach to monetary policy.

“We are deeply aware that a rise of more than 2% in the prices of fresh foods and other everyday essentials is negatively impacting people’s lives,” Ueda told parliament.

He added that food price increases may not be temporary, posing risks to consumer sentiment and broader price expectations.

Ueda’s comments come after the BOJ raised short-term interest rates to 0.5% last month, marking the first hike in 17 years.

The move reflects policymakers’ confidence that Japan is transitioning toward sustainable, wage-driven inflation.

In December, Japan’s overall consumer price index (CPI) rose 3.6% year-over-year, significantly outpacing the 3.0% core CPI increase, which excludes volatile fresh food prices.

The jump was primarily driven by higher costs of fresh vegetables and rice. However, Ueda has previously suggested that cost-push inflationary pressures may ease by mid-year.

BOJ’s approach to interest rates and bond tapering

The BOJ evaluates inflation trends beyond short-term price fluctuations, focusing on underlying inflation that excludes volatile factors like fuel and fresh food prices.

Ueda reiterated that the pace of future rate hikes will depend on economic conditions, inflation trends, and financial stability.

Additionally, he confirmed that the BOJ will conduct a mid-term review in June on its current plan to scale back government bond purchases, with a new strategy set to take effect from April 2026.

Under a framework announced last July, the BOJ intends to halve its monthly Japanese government bond purchases to 3 trillion yen ($19.52 billion) by early 2026.

“Our bond-tapering plan is designed to be predictable yet flexible, ensuring market stability,” Ueda stated.

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Senator Cynthia Lummis is urging the United States to consider Bitcoin as part of its national reserves.

With concerns over inflation, government spending, and the long-term stability of the US dollar, Lummis argues that Bitcoin could offer a new level of financial transparency.

As chair of the Senate Banking Subcommittee on Digital Assets, Lummis is focused on integrating Bitcoin into US economic policy.

She highlights that Bitcoin’s decentralized nature allows for real-time auditing, a feature that could significantly enhance trust in the financial system.

Unlike gold or fiat reserves, Bitcoin holdings can be verified instantly with a basic computer, eliminating the need for complex audits.

The senator’s remarks come as multiple US states explore Bitcoin reserves. Pennsylvania, Texas, and Wisconsin are among those considering digital asset reserves as part of their financial strategy.

This state-level momentum could pave the way for broader national adoption, with Lummis pushing for discussions at the federal level.

US states test Bitcoin reserves

Bitcoin-backed reserves are no longer a fringe concept.

In the US, individual states have begun exploring Bitcoin as an alternative asset to hedge against inflation and financial instability.

Lummis believes that state-level adoption could create a precedent, eventually influencing federal policy.

Texas has already embraced Bitcoin in multiple ways, including through mining incentives and legislative support for crypto-friendly policies.

Meanwhile, Pennsylvania and Wisconsin have signaled interest in exploring how Bitcoin reserves could fit into their broader financial strategies.

Internationally, the trend is also gaining traction. Lummis recently noted that the United Arab Emirates has shown interest in Bitcoin reserves, reflecting a global shift toward recognizing the asset’s potential role in national financial strategies.

Bitcoin and US debt

Lummis has positioned Bitcoin as more than just a speculative asset—she sees it as a tool to address national debt concerns and strengthen the US dollar’s position as the world’s reserve currency.

With US national debt surpassing $34 trillion, policymakers are increasingly seeking alternative strategies to manage long-term fiscal challenges.

Bitcoin, with its fixed supply of 21 million coins, is viewed by some as a hedge against inflation and excessive government spending.

If integrated into the US reserves, Lummis suggests that Bitcoin could serve as a safeguard against monetary debasement.

The broader adoption of Bitcoin as a national reserve asset faces significant regulatory and political hurdles.

The Federal Reserve and the Treasury Department have yet to signal any shift in policy toward incorporating Bitcoin into national reserves, despite growing support from crypto-friendly legislators.

Lummis encourages Bitcoin supporters to engage with lawmakers

Senator Lummis is set to discuss Bitcoin’s potential role in national reserves at Bitcoin 2025, a high-profile event focused on cryptocurrency and financial innovation.

She has encouraged Bitcoin supporters to engage with lawmakers to push for policy changes at both the state and federal levels.

As discussions around Bitcoin reserves gain traction, the financial landscape could witness a major shift in how digital assets are perceived by governments.

While resistance remains strong among traditional policymakers, growing interest from states and international players suggests that Bitcoin’s role in sovereign financial strategies is far from settled.

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Presidents Day, set for Monday, 17 February 2025, is a federal holiday in the United States, leading to widespread closures in key financial and government services.

While retail businesses, restaurants, and grocery stores remain open, major institutions such as the stock market, banks, and post offices will shut operations for the day.

For investors, traders, and everyday consumers, the holiday brings logistical disruptions, particularly in financial markets and postal services.

The New York Stock Exchange (NYSE) and Nasdaq will remain closed, halting all equity trading. US bond markets will also suspend activity for the day, aligning with the federal holiday schedule.

Major banks and post offices will not operate, delaying transactions and deliveries across the country.

What is Presidents Day?

Presidents Day, observed on the third Monday of February, is a US federal holiday originally established to honor George Washington’s birthday on 22 February.

Over time, it evolved to recognize all US presidents, including Abraham Lincoln, whose birthday falls on 12 February.

The holiday was officially moved to a fixed Monday schedule in 1971 under the Uniform Monday Holiday Act, creating a long weekend for workers and businesses.

While widely recognized as a time for retail sales and discounts, Presidents Day primarily affects government services, financial markets, and postal operations, with closures across banks, stock exchanges, and federal offices.

Stock market closures: No trading on Presidents Day

The closure of the stock market on Presidents Day is part of a longstanding tradition of financial institutions observing federal holidays.

The NYSE and Nasdaq will not open on 17 February, pausing all trading for the day.

This means investors will need to plan transactions ahead of time, as there will be no ability to buy or sell stocks until markets reopen on Tuesday, 18 February.

US bond markets, including those managed by the Securities Industry and Financial Markets Association (SIFMA), will also halt trading.

This aligns with the market holiday schedule, which sees closures on days such as Good Friday and Thanksgiving.

The next market holiday after Presidents Day will be Good Friday on 18 April, followed by Memorial Day.

For traders and analysts, the holiday timing is crucial, as it occurs during a volatile period for financial markets.

February often sees corporate earnings reports and Federal Reserve updates influencing investor sentiment.

The pause in trading could lead to increased activity on Tuesday as markets adjust to any news or developments that occurred over the weekend.

Banks and post offices: delays in transactions and mail services

Financial institutions will also shut their doors on Presidents Day, affecting banking services across the country.

Major banks, including JPMorgan Chase, Bank of America, Wells Fargo, Citibank, and PNC Bank, will not operate in-branch services.

Customers will still have access to ATMs and online banking, but transactions requiring in-person assistance will be delayed until Tuesday.

For consumers relying on postal services, the US Postal Service (USPS) will suspend mail delivery and close all post office locations for the day.

This will impact regular mail and packages handled by USPS, although private couriers like UPS and FedEx will continue to offer services.

UPS Store locations will remain open, but deliveries using UPS SurePost and UPS Mail Innovations may see delays due to the USPS closure.

For businesses relying on postal and financial services, the holiday adds a layer of logistical planning.

Payroll processing, wire transfers, and banking transactions that require in-person verification will need to be completed before the weekend or postponed until the following business day.

How Presidents Day fits into the broader financial calendar

Presidents Day marks the first major federal holiday affecting financial markets in 2025.

While many Americans see it as a long weekend, financial professionals and businesses must account for the market closure and its potential ripple effects.

Historically, trading volumes tend to be lower on the Friday before the holiday, with a surge in activity when markets reopen on Tuesday.

The holiday also falls within tax season, meaning those filing early tax returns may experience slight delays if they need assistance from banks or postal services.

IRS processing times remain unaffected, but individuals relying on paper filings or mailed documents may need to adjust their schedules.

Looking ahead, the financial calendar will see additional market closures, including Good Friday in April and Independence Day in July.

These scheduled pauses are key considerations for investors, traders, and businesses managing financial operations.

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Gold prices had surged to an unprecedented high last week, breaking the $2,900 per ounce barrier for the first time. 

The surge is largely attributed to escalating trade tensions between major economies, which have triggered a flight to safety among investors. 

Gold, traditionally viewed as a safe-haven asset, tends to attract investment during times of economic uncertainty and geopolitical risk. 

Can gold prices rise further?

However, analysts question whether the yellow metal can rise further. 

Gold’s safe-haven appeal has more or less overshadowed the impact of the dollar and US bond yields. 

“It is difficult to say how long this unusual situation will last. In the short term, however, it looks as though the recent record high may not be the last,” Carsten Fritsch, commodity analyst at Commerzbank AG, said. 

The proximity to the USD 3,000 mark also favours a further price increase. However, it is also clear that this will increase the correction potential.

Despite the missing traditional support from the US dollar and real yields, precious metals have emerged as a top-performing asset class in 2025. 

The inverse correlation typically observed between gold prices and the 10-year US TIPS yield has significantly weakened lately.

“Instead, we suspect gold has benefitted from investors’ fears around the possibility of another trade war,” Investing.com quoted Joe Maher, an assistant economist at Capital Economics as saying in a report. 

Despite the record-breaking rally over the last few weeks, gold’s rally might not sustain for long, according to Maher.

“Concerns that gold may get caught in the trade war crossfire may also have led US investors to buy up gold to get ahead of any future tariffs that might affect US gold imports. This may partly explain the recent stockpiling of gold on the Comex in the US,” he added.

The economist notes that, while recent tariff-related concerns are significant, they are only one factor contributing to the shift away from gold’s traditional market drivers.

Additionally, the US and its allies froze around $300 billion of Russian reserves after Russia invaded Ukraine.

This may have motivated central banks to purchase gold as a way to mitigate exposure to US sanctions.

High prices curb demand

The sharp rise in the price of gold has begun to dampen demand in the two most important consumer countries, China and India.

Fritsch added:

Dealers in China report very weak demand after the end of the Lunar New Year holiday, attributing this to the higher price level.

As a result, gold in China is being offered at a discount of USD 7-10 per troy ounce to the spot price, he added. 

The situation in India is even more dramatic, according to Commerzbank. 

Gold demand has plummeted 70-80%, according to a senior representative of the India Bullion and Jewellers Association, Commerzbank noted. 

Consequently, Indian gold dealers are offering discounts of $30-$38 per ounce off of official local prices, according to the German bank.

“The industry representative indicated that without the supply shortage, the discount would be even higher, more than USD 100.”

The World Gold Council reported that demand for jewelry in China dropped significantly by 24% over last year, with an even sharper decline towards the end of the year. 

In India, however, jewelry demand only fell by 2%, as a substantial cut in the gold import tax in July 2024 counterbalanced the steep increase in prices.

“This particular demand-supporting factor no longer applies,” Fritsch said. 

China and India together account for more than half of private gold demand.

Other major gold-consuming regions such as the Middle East may also witness a slump in demand due to high prices. 

“These developments show that the gold boom has negative side effects and is not a one-way street,” Fritsch said. 

Gold prices: overbought levels?

“There are two words repeatedly used to describe gold’s performance during the past fortnight: ‘Overbought’ and ‘resilient’,” said David Morrison, senior market analyst at Trade Nation. 

Gold prices surged towards the end of January, decisively surpassing the previous all-time high recorded in October. 

This upward trajectory had been steadily building since mid-December, showcasing a remarkable resilience with a notable absence of any substantial pullbacks or corrections. 

This sustained rally underscored a robust bullish sentiment in the gold market, potentially driven by a confluence of factors such as global economic uncertainties, geopolitical tensions, or a weakening US dollar.

“This was an impressive, and stealthy, rally which saw a gentle rise in the daily MACD as upside momentum continued to build,” Morrison said. 

That helped gold hit a fresh all-time intra-day high of over $2,964 last week. 

Prices subsequently pulled back a touch and were around $2,910 per ounce on Monday. 

“But whereas such a pullback was typically the precursor to a deeper sell-off throughout most of 2024, this time round it turned out to be a buying opportunity,” Morrison added. 

So, the bull run continues, and gold’s resilience shines through. But it remains overbought, so bulls should stay on their toes.

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