The interest rate cut may "fall first and then rise", and the market is likely to perform well during the US election.
The current market view is that the Bureau of Labor Statistics will significantly reduce the number of employed people. If this really happens, it is not a good thing and may increase the market's expectations of a recession.
Possible adverse situation: If the employment data is significantly lowered, it may cause market concerns about the health of the US economy.
At this time, defensive assets (such as utilities and consumer staples, even including AI) may perform better, while economically sensitive sectors may perform poorly.
As for cryptocurrencies: Although we all know that the US dollar index and cryptocurrencies are inversely proportional, the decline in the US dollar index is often linked to interest rates.
For example, in the past two days, it can be clearly seen that the US dollar index has fallen sharply, but BTC has not risen sharply. This is because the market's expectations for interest rate cuts are more inclined to economic problems. This is why it is said that a 25 basis point interest rate cut in September may be a positive, and a 50 basis point interest rate cut may be a negative.
The essence is to see whether the economic recession is part of the transaction.
Why do I say that? Because as the U.S. Bureau of Labor Statistics may expect a downward revision of employment data, the unemployment rate will increase, and the probability of a recession will rise. Although the current GDP and retail data do not support a recession, as long as the unemployment rate rises, a recession is likely to occur again. At this time, a sharp interest rate cut means that the Federal Reserve is aware of the possibility of a recession.
From our point of view, the September interest rate cut is almost 100%, and after September is the U.S. election. It is very likely that the market will perform well during the election. From the trend point of view, it also conforms to the "later rise" market, but whether it will fall first depends on how the game of the recession works. The most critical point here is the unemployment rate. This interest rate meeting will be on September 19, and there will be an August non-agricultural data released in early September. In addition, the August retail data will also be released before this. On the contrary, the importance of CPI and PPI will be lower.
