Last Friday's non-farm payroll report was somewhat lackluster, with a high probability of a rate cut in December. The overall non-farm employment data was slightly above expectations, but the weak data from last month (only 12,000) was hardly revised, indicating that there are indeed some signs of weakness in the labor market. However, the slightly higher unemployment rate shows that the job market is gradually cooling down, without significant deterioration. In the current positive risk context, this supports the Federal Reserve's potential rate cut in December. Currently, the market anticipates an 85% chance of a 25 basis point cut in December and about a 30% chance of another cut in January.
Bond volatility has dropped to multi-year lows, with yields further declining; the 2-year yield is close to 4%, and the 10-year yield has returned to 4.15%. Before the FOMC meeting, the market will see the release of CPI and PPI data, which are the last few important economic data points before the end of the year. As the Trump 2.0 policy gradually takes shape, the yield curve may steepen again.
In the U.S. stock market, thanks to favorable data and a dovish performance in the bond market, U.S. stocks are once again approaching historical highs. The technical indicators remain supportive, with the advance-decline index consistently moving upwards, and the number of stocks reaching new 52-week highs still exceeding those hitting new lows, leading to a broad rise in the stock market.
Interestingly, the risk appetite is so widespread that growth stocks are once again outperforming value stocks, which is relatively rare in the later stages of economic growth. Is this a contrarian signal of the current market overheating, or a preliminary sign that the market may welcome a new round of rally in January? One thing is certain: any form of short position in the current market faces significant risks...
In the cryptocurrency sector, all indicators are broadly positive, with BTC once again closing near $100,000, while ETH is expected to break through $4,000. ETF inflows are massive, with BTC ETF and ETH ETF seeing additions of $2.7 billion and $800 million respectively, marking ten consecutive days of positive inflow. Traditional finance inflows remain the dominant factor behind the spot performance, with a cumulative inflow of about $12 billion since the election. Meanwhile, Blackrock and Microstrategy have quietly become the largest holders of BTC in the market, collectively holding nearly 1 million BTC, permanently changing the supply and landscape of the market.
Finally, as market bullish sentiment continues, the funding rates for perpetual contracts remain relatively high, with annualized rates exceeding 20% on major exchanges. The BTC volatility curve also shows a strong bullish bias, although selling strategies are still prevalent, keeping overall volatility stable.
