How to manage (manipulate) market expectations? The easiest way is to fine-tune the results of the data, thereby "helping" the market to correct its judgment on the timing of interest rate cuts.
In this regard, it has to be said that this term of the Federal Reserve and the US government are definitely the best of the best. Don't you see, after the release of the latest non-agricultural data in January, the time for interest rate cuts is expected to be brought forward from the end of the year to September. This time, which is neither too early nor too late
Data show that the seasonally adjusted non-farm employment population in the United States recorded an increase of 175,000 in April, the lowest increase since October 2023, lower than the expected 243,000 and the previous value of 303,000. The U.S. unemployment rate unexpectedly rose to 3.9% in April, while market expectations remained unchanged at 3.8%. The average hourly wage rate in the United States recorded 0.2% in April, lower than expected and the previous value of 0.3%.
The authenticity of the data will not be discussed for the time being, but after the results were announced, FEDWATCH shows that the probability of interest rate cuts in September this year has exceeded 70%. And just a week ago, mainstream market expectations once postponed the rate cut node to around the end of the year.
In fact, there have been many revisions and changes in market judgments this year: from March, which was expected at the beginning of the year, it has been delayed to the middle of the year, and then the Yingpai statement has been further postponed to the end of the year, but now it has returned to around the third quarter again.
In terms of financial markets, mainstream risk assets have become the biggest winners of the news. The leading brother Nvidia gapped higher again, helping the US stock index rebound as a whole. The imminent combination of the U.S. dollar and gold both bottomed out and rebounded, suggesting that the short-term shock situation has yet to be chosen. Although crude oil is under pressure, it is also within its large trading range.
Theoretically, the "victim" of the biggest negative news, the U.S. bond yield also performed moderately, stepping out of the lower shadow market. Of course, it should be noted that it has fallen for 3 consecutive days before the non-farm data, more or less advance the possible negative.
It can be seen that although there has been a certain degree of change in monetary policy expectations again, the assets themselves are very calm. We have said before that in the face of the more critical general election issue, when to cut interest rates is itself a tool option, and it will not really become the winner or loser of market changes: the overall shock is still selling high and buying low, and the (rising) trend is intact The variety is still the rhythm of big drop, big buy, small drop and small buy. Even now I have a guess that the timing of the rate cut may hint at the outcome of the US election.
If the interest rate is cut later, the probability of the * * main party winning will be very high; If the rate is cut earlier, it means that the Republican Party has a chance to make a comeback. Logically speaking, a later rate cut means more latecomers, which is conducive to the choice of the next ruling party, while a rate cut means that the Democratic Party needs to maintain the current financial market stability for the sake of the election. Judging from the current situation in the first half of this year, it seems difficult for the Republican Party to reverse the situation.
Of course, as the title says, whether it is September, the end of the year, or earlier, it will not affect the existing transaction logic as a whole. Everyone must not panic because of 1 or 2 data or the Fed's speech.
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