On the eve of the Federal Reserve's silent period, a key non-farm data report has completely stirred up the global market—only 22,000 new jobs were added to the U.S. non-farm payrolls in August, far below the market expectation of 75,000, and significantly lower than the previous value of 73,000; although the unemployment rate remained at 4.3%, it has still not reached the Federal Reserve's year-end forecast of 4.5%. This data not only confirms the turning point in the labor market but also kicks off the speculation around 'big rate cuts' ahead of schedule, and a larger market reshuffle has just begun.
1. The 'Dead Angle Game' Behind Non-Farm Data: 22,000 New Jobs, Directly Pointing to the 'Rate Cut Speculation Cycle'
Prior to this, the market had three predictions for the non-farm payroll data: a figure below 40,000 would trigger speculation about a "significant rate cut"; 60,000 to 80,000 was the "golden range," with the stock market rallying on the promise of a "neither hot nor cold" economy; and a figure above 100,000 would spark concerns about the Fed's hesitation to cut rates. A figure of 22,000 puts it squarely within the range most inclined toward expectations of a rate cut.
But the more crucial factor isn't whether the data is good or not, but rather the signal it confirms—the labor market has officially turned downward. In the previous few months, the non-farm payroll figures, while fluctuating, had consistently remained above 50,000, leading to market debate about whether the labor market was resilient. The 22,000 increase has all but dispelled all doubts, leading the market to begin betting that the Fed's window for rate cuts may open sooner than expected.
2. Violent market linkage: the US dollar becomes a "risk currency" and gold hits a record high
After the data was released, global asset prices reacted dramatically: the US dollar index plummeted, gold prices hit a record high, US stock futures fell before rising, and even previously volatile cryptocurrencies saw a short-term rally. This dynamic suggests a new shift: the nature of the US dollar is shifting.
In the past, the US dollar served as a safe haven, rising during market panics and causing risk assets to fall. But now, the US dollar has become more of a "risk currency." For example, when the non-farm payroll data was released last month, the US dollar's volatility even exceeded that of the stock and bond markets. This time, too, the same thing happened: after the disappointing data, the market initially sold off US stocks due to fears of an "economic slowdown," then turned to buying risk assets on expectations of rate cuts, while the US dollar fell throughout the entire process. This demonstrates that the US dollar is now deeply tied to expectations of rate cuts. The stronger the expectations, the weaker the US dollar, and the more likely risk assets are to rise.
3. Tonight is just a prelude! Next week's "annual revision" may overturn the employment picture
If tonight's non-farm payroll report is the appetizer, then next week's annual revision to the employment data will be the main course that will determine market direction. Last year, the US revised down its non-farm payroll data by hundreds of thousands, directly rewriting the market's perception of the labor market. This year, economists are even more aggressive in their predictions—a potential loss of 800,000 jobs.
If this prediction were to come true, the consequences would be disastrous: the employment outlook, previously characterized by a moderate slowdown and the expectation of a rate cut, would instantly shift to a panic of a sharp contraction in employment and a warning of a recession. Market sentiment would then shift from the current hope for a rate cut to a fear of a recession. The US stock market could shift from its "rate cut bull run" to a correction. Safe-haven assets like gold would continue to soar, while high-risk assets like cryptocurrencies could face significant volatility.
Global markets have entered a sensitive period. Tonight's non-farm payroll figures are just the beginning; next week's revised figures will be the real test. Whether you're trading stocks, cryptocurrencies, or gold, you need to be on high alert—a major reshuffle that will shape the market for the next six months has begun.
