Why is the non-agricultural data so important? You should know that there are three reasons for the plunge in the Japanese stock market on August 5.

The first is that Japan suddenly announced an interest rate hike. The second is that the number of non-agricultural employment in the United States plummeted, which will trigger the market's expectations of the possibility of a US recession. The third is that the Federal Reserve released a strong signal of interest rate cuts, which caused a large number of carry traders to close their positions, resulting in a sharp drop in the market.

Will the black swan event of August 5 continue next Monday? What do you think about the market next?

Let's look at the data from the CME. As of now, there are still 10 days before the next FOMC meeting. After the release of the non-agricultural data on Friday, the market believes that the forecast rate for a 25 basis point rate cut is 70%, and the probability of a 50 basis point cut is 30%.

Don't like to look at this data like this: the Democratic Party led by Biden and Harris is likely to cut interest rates in September, which will also increase the support rate of the Democratic Party. In addition, Powell's Federal Reserve has already released a strong signal of interest rate cuts. In short, there is no escape from a rate cut in September. However, in order to avoid causing fluctuations and turmoil in the financial market, I think the probability of a 25 basis point cut will be relatively higher, because a 50 basis point rate cut is considered a drastic and high-profile move. The Democratic Party may adopt a more cautious policy, that is, a 25 basis point rate cut and implement an economic or US soft landing.