Last Friday (December 8), the U.S. Department of Labor released the U.S. non-farm payrolls data for November, which increased by 1990,000 people, more than the expected increase of 180,000 people, also higher than the previous value of 150,000 increases;The unemployment rate was recorded at 37%, down from 39% of the previous and expected values. The two most important data in the non-farm payrolls report were better than expected, bearish**, and **straight line** after the release of the data.
Inflation sparks reverie, but optimism is overdone
On November 14, it was announced that the annual rate of CPI in the United States in October was 32%, significantly lower than 3The previous reading of 7%, as well as the monthly rate and the PPI data released the next day, indicated that inflation had fallen sharply after rising for three consecutive months. Coupled with the Fed's interest rate hike at the end, the market began to bet heavily that the rate hike is over, and not only that, but the voice of the bet on a rate cut next year is getting louder and louder, **continue**, hitting a record high. This madness did not last long, and under the call of many investment banks, the market gradually returned to rationality and fell sharply.
Just two weeks ago, speculation about interest rate cuts was endless, but this time the non-farm payrolls can be said to have directly poured a basin of "ice water", and the market instantly calmed down, and it was necessary to wait patiently for the Fed's signal to end interest rate cuts. The NFP report is bound to attract the attention of the FOMC and remind investors that the labor market remains strong and that while inflation persistence is no longer a challenge, the Fed is likely to signal that it needs to be patient. Fed Chair Jerome Powell said in a recent speech that there is no reason why spending should not continue to grow as long as the unemployment rate remains low and wages are rising faster than inflation;What the Fed hopes is that demand slows enough for inflation to continue to come down and the economy doesn't fall into recession.
The debate between a "hard landing" and a "soft landing" is still ongoing
Recently, there has been more and more debate about "hard landing" and "soft landing", and JPMorgan executives said in an interview that the market mistakenly believed that the expectation of a "soft landing" for the U.S. economy was digested in advance, and was overly optimistic that the Fed could curb inflation while avoiding a recession, and the market would soon realize that the actual outlook for the U.S. economy was much bleaker than expected, and the possibility of a "hard landing" for the economy was very high.
Goldman Sachs** shows that in the event of a "soft landing", the Fed is not expected to cut interest rates until the fourth quarter of 2024, when the Fed will only cut rates by 25 basis points each quarter, and the federal ** rate will finally reach 350%-3.75%, which is higher than the neutral rate in the previous cycle. The World Association released a report saying that a mild recession in the U.S. economy is still a high probability event, and if the U.S. can achieve a soft landing next year, it will be hit.
On the whole, since October, the market has been betting that the Fed's interest rate hikes will end and the rate cut may be over for the time being, and if the U.S. economy continues to improve (achieve a soft landing), the Fed may maintain a slow and small rate cut in the next few years, which has a weak effect on the boost;However, if the Federal Reserve is forced to cut interest rates sharply and even offer unlimited QE due to the downward pressure of the economy, the big bull market will inevitably open. From a technical point of view, ** fell sharply after rushing higher this week, focusing on the support of the $1980 line below, and the resistance of $2030 2050 and $2080 above.
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