The cause of the market crash can be attributed to the superposition of multiple negative factors. Last Friday, bleak economic data released by the United States triggered deep concerns about the global economic slowdown in the market. This sentiment quickly spread to Asian markets, especially the emergency liquidation of yen carry trades, which hit Japanese stocks hard. At the same time, geopolitical tensions in the Middle East escalated, and Iran's threatening remarks against Israel exacerbated market unrest.
To make matters worse, the cryptocurrency market was also hit hard, and the difficulties of large market maker Jump Trading and the forced liquidation of its ETH positions added a strong stroke to this turbulent situation. In addition, the market reaction was further amplified during the summer weekend when liquidity was scarce, forming a vicious cycle.
It is worth noting that the market is adjusting expectations quickly, as if the script of the Covid period is being played out again. The federal funds futures market has already priced in tough responses in advance, and expectations of a Fed rate cut have risen sharply, from almost impossible a week ago to the possibility of a 50 basis point rate cut at the September meeting. Soaring to 98%. Some even called for an "emergency rate cut" to be implemented before the September meeting to meet current economic challenges.
