Non-farm "Blast", Fed Rate Cut "Hit the Brakes": An Unexpected Reversal in Crisis?

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Preface:

Dear friends, do you feel that the Fed's rate cut is like a chilled watermelon in summer, both refreshing and timely? But this time, we might need to put our expectations on hold. Just when everyone thought the Fed would keep "flooding" the market, the US non-farm data came out like a runaway horse, once again "blowing out of the water"! Now, the Fed's rate cut pace might have to "hit the brakes". Wouldn't you say this is more of a reversal than a plot twist?

Main Text:

I. Non-farm "Blast", Market in an Uproar

Non-farm data is like the "internet celebrity" of the economic world. Every time it's released, it can cause a stir in the market. This time, when the September non-farm data came out, it was simply astonishing—employment increased by 254,000 people, far exceeding the market's expectation of around 150,000! What's more, the figures for July and August were also significantly revised upwards. As soon as this news came out, the market exploded instantly, and investors纷纷表示: "We didn't write this script!"

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Looking at these figures, I can't help but think of the old saying: "Plans can't keep up with changes." Originally, everyone was hoping that the Fed's rate cut would bring a wave of "windfalls", but with the non-farm data coming in, the pace of the rate cut might be disrupted. Indeed, the market's expectation for a 50 basis point rate cut in November has dropped to 0, and the probability of a 25 basis point rate cut has also only 97.4% left. This change is faster than a Sichuan opera face change!

II. Fed Rate Cut "Hit the Brakes", Where Will the Market Go?

The Fed is also quite helpless on this front. The rate cut was originally intended to counter economic downward pressure, but with the non-farm data coming out, the pace of the rate cut has to slow down. Would you say this is a case of "good intentions leading to bad outcomes"?However, the Federal Reserve is not to be underestimated. They possess a comprehensive monetary policy system. Indeed, Musallam, a FOMC voter, has spoken out: "We support rate cuts, but they must be gradual. Premature and excessive easing could be very costly." This statement has somewhat stabilized the market. Yet, investors are still uncertain—can the rate cuts continue?

The Federal Reserve lowers interest rates to stimulate the economy, but the timing and conditions must be considered. The strong non-farm data indicates that the U.S. economy still has some resilience. Thus, it is not surprising that the pace of rate cuts has slowed down.

III. Opportunities and Challenges Coexist in Crisis

Of course, the reversals in this crisis are not without benefits. At the very least, they serve as a reminder: investing requires constant vigilance and flexibility. You must follow the rhythm of the market to avoid being left behind.

Just like the "explosive" non-farm data this time, many investors may have lost a significant amount of money without even realizing it. But if you can adjust your strategy in time and adapt to market changes, you might find some opportunities.

Take Goldman Sachs strategist George Cole, for example. He had already predicted that U.S. Treasury yields would rise and the Federal Reserve's rate cuts would change. So, he prepared in advance and adjusted his investment strategy. As a result, even if the market reverses, he can handle it calmly and even profit from it.

Therefore, the reversals in this crisis are actually an opportunity. They show us the complexity and uncertainty of the market and remind us to remain vigilant and flexible at all times. Only in this way can we go further and more steadily on the path of investment.