The Federal Reserve's rate cut expectations explode, and the market's direction changes suddenly!

#US Tariffs

Last night's data was a heavy blow, and the market instantly went crazy betting on a rate cut in September, with a probability of over 90%, and two cuts by the end of the year are almost certain.

Why the sudden shift?

1. ADP employment collapsed:

Only 152,000 jobs were added in May, far below the expected 175,000, marking the worst performance in nearly six months.

2. ISM services can't hold on:

The index is only 50.3, close to the line of expansion and contraction, with high business costs and a heavy economic climate. The US economy relies on the service sector for 70%, and if this sector falters, GDP will suffer.

Key signal:

Tariff pressure is genuinely impacting businesses, and the market has shifted from “wait and see” to “certainty”: the economy is truly hurt, and the Federal Reserve must cut rates!

What to look for next?

• This Friday's non-farm payrolls, next week's CPI: If they continue to weaken, rate cut expectations will be firmly locked in.

• Key data from July to August: This will truly reflect the “delayed bomb” effects of the tariffs.

Trump also gets involved:

Rarely posting to angrily criticize Powell: “What are you waiting for? Europe has cut rates nine times already!” Political pressure is soaring.

Summary:

Market logic has completely shifted, and rate cuts are now the main theme. Traders are thrilled, business owners are staying up late, and the core focus moving forward is simple: is the data weak enough, and will the Fed dare to take action!