Last night's non-farm payrolls led to two expectations in the market, with expectations of recession and a 25 basis point rate cut in September rising to 50 basis points. The sharp drop in US stocks is obviously due to concerns about recession.
The ISM non-manufacturing index and S&P Global's service industry index will be released next Monday. After all, the service industry accounts for 60% to 70% of the US GDP. If the service industry weakens, expectations of recession will be further strengthened.
I think the baseline scenario this year is still the previous judgment that economic indicators will weaken but will not reach the stage of recession. At most, it will be a defensive rate cut, just on the eve of the recession, with the help of the election, emotions, and the narrative of BTC, and then come out of the top, and then prepare to welcome the recession and a new round of bottom-fishing.
I saw that many macroeconomic leaders believed that the recession would be in Q1 or Q2 next year, and then they talked about the previous gap. Generally, if the gap is not filled within three weeks, it will be filled in the bear market.
There is actually nothing wrong with this scene now. Everything is reflected after the election. Defensive rate cuts are not a big problem.
Finally, I want to complain about Powell. The Fed raised interest rates too late and allowed inflation to soar to 9.5. This time, the interest rate cut was too late, which made the US stock market tremble. However, setting a fire first and then putting it out after it starts is called a great achievement that will be written into history. The flames were strangled long ago, so what political achievements are there? 😂
