The latest data released on the evening of August 2 showed that the number of new non-farm jobs in the United States in July (preliminary value) was 114,000, which was not only far lower than 272,000 in May and 206,000 in June, but also far lower than the market expectation of 175,000.
The unemployment rate rose to 4.3% in July, the highest level since November 2021.
That night, the exchange rate of the U.S. dollar against the RMB fell by 1.043%, the largest single-day drop since 2023. Behind the weakening of the U.S. dollar is the U.S. economic data that began to show signs of fatigue.
The risk of a U.S. economic recession has led to a sharp drop in U.S. stocks, which was also the background of the last bull market in the cryptocurrency circle.
Because of the 11 large interest rate hikes, funds flowed into banks. As a result, although inflation was curbed, the economic deterioration exceeded expectations. The interest rate cut is like a reservoir. The interest rate cut opens the tap, funds flow out, and the US stock market will naturally fall.
The biggest driving force behind the last bull market was not loose quantitative policies, but the massive inflow of funds brought about by traders' pessimistic expectations for the economic outlook. Bitcoin and gold have little correlation, but both are strong reverse indicators of economic expectations.
The decline in unemployment rate triggered the Sahm Rule, and the Sahm Rule represents the possibility of economic recession. So yesterday, U.S. stocks rose, U.S. bonds fell, and the cryptocurrency market fell because funds returned to U.S. stocks and U.S. bonds. But today, U.S. bonds fell, U.S. stocks fell, the cryptocurrency market fell, and even gold fell.
The current unemployment rate is only 4.3%. It will only be in the dangerous range if it rises above 5.3%. It is still in a game stage. Investors are also betting that the Fed can cut interest rates before the economic recession, which can also become a defensive rate cut. After all, the economic recession is also caused by high interest rates. If the high interest rates are solved early, nothing may happen. So this is called a "recession trade", and the "recession trade" is not a real recession.
As for the big drop on Friday, compared with Monday to Thursday, the liquidity of funds on Friday is generally lower. It is not so bad for US stocks as there is no trading on weekends. For the cryptocurrency market, it is open 24 hours a day. Coupled with low liquidity and bearish sentiment, it is naturally more difficult to deal with the drop.
Judging from the current market performance, changes in the unemployment rate have indeed had a significant impact on market sentiment. The triggering of the Sam Rule further intensified the market's concerns about economic recession, leading to simultaneous declines in a variety of assets.
However, a single indicator does not tell the full story of the economy. Although the unemployment rate has risen, it is still at a relatively low level, and the GDP data is strong, which shows that the economy has not entered a full-scale recession.
Market volatility is particularly evident on Fridays, and the reduction in capital makes the market more vulnerable to negative news. For the cryptocurrency market, due to its 24-hour trading characteristics, weekend fluctuations may be more severe, and investors need to remain vigilant.
Overall, the current market is more about trading on the uncertainty of the future economic outlook rather than an actual recession. Investors should pay attention to the policy trends of the Federal Reserve and the overall performance of the global economy in order to make more rational investment decisions.