The Fed's rate cut is basically a done deal🎯, but surprisingly, the market is still uncertain and the decline continues📉.
The non-farm data in August was far below expectations, and even the non-farm data in June and July were revised down by more than 80,000. The performance of the small non-farm was also lackluster👎. Therefore, judging from the economic data, the Fed's rate cut is almost a done deal, but the suspense now is whether it will be cut by 25 basis points or 50 basis points?
Current data shows that the probability of a 50 basis point cut is rapidly approaching 50%, but the choice in the middle is indeed quite tricky🤔.
If the economy has no signs of recession, then a 25 basis point cut may be a preventive measure⛑️. But if the economy has already entered a recession, an insufficient rate cut may further accelerate the economic decline⛷️, and then it will be impossible to save it. However, if it decisively cuts by 50 basis points, it is equivalent to publicly admitting that the economy has fallen into recession⏳. This will change market expectations and bring more negative emotions. US stocks may continue to fall, and the shrinking market value of US stocks will further hit the economy💣.
The current market sentiment is like a balance hanging in the air⚖️, keeping a close eye on the Fed's movements while constantly fluctuating. The crypto market is like the shadow of the US stock market. It seems to have no presence when it rises, but it always follows closely when it falls👥.
At present, there is no clear signal of the bottom📡. I will continue to wait and see👀 and wait for further reactions from policies and markets.