China's market "quietly retreated", the world fell, how long can the rally last?

Recently, the Chinese market gave up its gains after the close, causing the upward momentum of the global market to pause. US stocks, treasuries, gold, crude oil, the renminbi, and even Bitcoin have all fallen. It is worth noting that this decline is unusual and does not seem to have any obvious news support, which may be due to anxiety before Powell's speech and the upcoming release of core PCE data.

From the overall trend, the pattern of "dollar rises, everything falls" is becoming more and more obvious. The US dollar index rose 0.59% in a single day, which is a big increase for any currency, and the corresponding expectation of the Fed's interest rate cut has declined.

Although the market expects the probability of the Fed's 50 basis point rate cut at the November meeting to rise to 59% (50% the day before), the market still fell, the reason is nothing more than the return of concerns about the economic recession.

​

Recent data showed that new home sales fell in August, bringing back memories of the unexpected decline in the consumer confidence index on Tuesday. One pessimistic data may not have much impact, but the combination of several negative data will amplify the panic in the market.

Next, economic data will have a much greater impact on the market than the speeches of Fed officials. If the employment data deteriorates, recession concerns will reignite; if the inflation data is bad, the Fed may suspend interest rate cuts.

Tonight, three important data will be released at the same time:

20:30 US initial jobless claims last week (previous value: 21.9; market expectations: 22.5)

20:30 US second quarter GDP final value (previous value: 3%; market expectations: 3%)

20:30 US August durable goods orders (previous value: 9.80%; market expectations: -2.6%)

If the data released tonight is lower than expected, the market will not just "fall lightly". Fortunately, within two hours after the data is released (21:10, 21:15, 21:20, 21:25, 22:30 Beijing time), several Fed officials will speak to protect the market, including Fed Chairman Powell.

This high-level arrangement may indicate that the Fed's attention to the release of this data cannot be underestimated!