China wakes up, and a decent decline occurred in global markets:
- The dollar, U.S. stocks, U.S. Treasury bonds, gold, Bitcoin, and other assets suffered indiscriminate selling, but the decline was not large. This decline was considered 'decent' because funds have not fully exited, but they also do not dare to launch a full offensive.
First, news of the call came yesterday, but the U.S. stock market did not gain any boost. The call was seen by the market as 'news landing,' leading to 'buying the news, selling the facts' operations.
There was no official statement on the White House's official website, but Trump revealed some details during an interview with reporters:
The talks lasted for an hour and a half, and the conversation was almost entirely about trade issues;
Further negotiations will take place 'soon' at a 'yet-to-be-determined location';
U.S. Treasury Secretary Mnuchin, Commerce Secretary Ross (newly added), and Greer will represent Trump in the talks.
Second, it is hard to say which specific news affected the market, as economic data was also released at the same time—first-time jobless claims in the U.S. rose for the second consecutive week, reaching the highest level since last fall, indicating that the labor market is gradually but genuinely slowing down. Meanwhile, the verbal spat between Trump and Musk also harmed market sentiment.
Third, the atmosphere before the release of non-farm payroll data has been heightened, with a sense of 'dark clouds looming over the city.'
Three scenarios for non-farm payrolls:
Weaker than expected (employment <100,000, unemployment rate rising), the probability of a rate cut in September skyrocketed (the market hopes to see 'soft enough, but not too bad');
In line with expectations (employment around 125,000, unemployment rate 4.2%), maintaining a wait-and-see approach, still leaning towards a rate cut in September;
Stronger than expected (employment >200,000, unemployment rate maintained or decreased), the probability of a rate cut in September decreased;
Investors are 'anticipating' whether the market will once again see 'Stop In Trade' after the non-farm payrolls—whether the belief that 'declines will still be bought' will be validated. Whenever the market declines (even with a small pullback), investors rush in to buy (i.e., 'passive stop-loss buying + active buying'), creating a trading structure of 'buying on the way down, buying on pullbacks'—this is a kind of 'self-repair mechanism' in trading strategy. If we do not see this scene tonight, then we really need to prepare for a major shift.
