Sell-off, just the prelude
The global market experienced an indiscriminate "small sell-off" at the beginning of trading on Friday: A-shares fell, Hong Kong stocks fell, gold fell, and crude oil fell, but then rebounded.
The panic triggered last night seems not to be over:
First, the U.S. July PPI month-on-month increase skyrocketed from 0.00% to 0.9%, which annualizes to nearly 11%, an extremely exaggerated figure—this is a number too large to be ignored. The sell-off triggered by this wave of PPI is not a "one-day scare," but rather the "prelude to a countdown."
Second, the market's probability of a Fed rate cut in September has dropped from 100% to about 85%, a very subtle change—essentially, the certainty of a rate cut has been broken. This breaking will cause some funds to choose to exit.
Third, the dollar index plummeted 1.4% on the day of the non-farm data (supporting rate cuts), while it only rose 0.4% on the day of the PPI—dollar bulls did not attack with full force, and funds are still observing. But market sentiment is shifting from "one-way trades" to "divergence battles."
The sell-off is just the prelude; Powell is the main act. Next week, Fed Chairman Powell will send signals to the world at the Jackson Hole annual meeting, and before he speaks, the market will repeatedly test the waters. The real direction will be established within 48 hours after Powell's speech, at which point it will be the "turning point day."
