After the release of this month's non-farm employment data in the United States, market expectations for a Federal Reserve rate cut in July have significantly cooled—originally optimistic sentiments have largely faded, and the likelihood of a rate cut has dropped sharply, almost to the point where it can be considered unlikely.
In contrast, while expectations for a rate cut in September have receded somewhat, they still maintain relative resilience, with current market pricing showing about a 70% probability. However, it is important to note that there is still a 24% chance that no rate cut will occur, reflecting that the market's divergence regarding the subsequent policy path has not completely dissipated.
Overall, the core impact of this data is to break the market's overly optimistic expectations for a rate cut in July, but whether there will be a rate cut in September still requires observation of the continuity of subsequent economic data; the current market judgment is generally leaning towards rationality and moderation.
From another perspective, if the pace of rate cuts is moderately delayed, it may not necessarily be a negative signal for the market. A slowdown in policy steps could potentially provide more sustainable support for the market, extending the current bull market cycle.
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