Non-farm "super storm" explodes! Is the Fed changing its policy? Investment signals in the global market volatility.

Recently, the "melon" in the global financial markets is exploding even more than a summer watermelon! The US non-farm employment data just threw out a "super thunderstorm", directly turning market expectations upside down - The employment data for the first two months saw a massive cut of nearly 260,000 jobs, leaving the direction of the Federal Reserve's policy in mystery, and causing a collective shock in global stock markets, bond markets, and currency markets! What happened exactly? What impact does it have on investments? 1. How fierce is the non-farm "thunderstorm"? Data directly "avalanche" July saw an increase of 73,000 jobs, which seems "okay"? But the data for the first two months were dramatically decreased: From 147,000 in June down to 14,000, from 144,000 in May down to 19,000, totaling a cut of 258,000 jobs! This is the harshest downward revision record since June 2020 (during the pandemic)! The unemployment rate rose to 4.248% (rounded to 4.2%, but just a step away from 4.3%), and the labor participation rate also decreased... The market originally thought that the US labor market was "relatively stable", but this data revision directly exposed the truth of weak employment - describing it as a "thunderstorm-level reversal" is not an overstatement! 2. Why the significant drop in data? The US Bureau of Labor Statistics (BLS) explained: "Revised seasonal factors + received more feedback." But those in the know are aware that non-farm statistics are already "max difficulty" (low response rate from businesses/households in that month, leading to data deviation). Adjustments in history are common, but cutting 260,000 in two months left even the "experienced drivers" stunned... Some even joked: "Is this just a statistical error, or...?" (Rationally speaking, it's probably statistical fluctuation, but the effect has already caused the market to explode!) 3. Is the Federal Reserve going to change course? Policy disagreements intensify! On one hand, Powell just mentioned: "The labor market is stable, no rate cut in July!" On the other hand, Governors Waller and Bowman directly voted against it, stating: "The market is slowing, rate cut needed to guard against risks!" More intriguingly - Fed Governor Brainard suddenly resigned (his term was supposed to end in January next year), giving Trump the opportunity to appoint a new person 6 months earlier! This means that the "rate cut camp" within the Federal Reserve may expand, intensifying policy disagreements instantly! Currently, the Federal Reserve is in a dilemma: on one hand, "inflation has not met the target, so they dare not cut rates at will", on the other hand, "employment is weak, the economy is cooling"... In this dilemma, how will the policies play out in September? It's a suspense! 4. Adding fuel to the fire with tariffs, "stagflation-like" situation approaching? While the non-farm numbers exploded, Trump played another big move: new tariffs increased the effective tax rate in the US from 17.3% to 20.5%, possibly for the long term! High tariffs + weak employment + if inflation doesn't come down, the US could be heading towards a "stagflation-like" situation (economic weakness + high inflation). This poses a major challenge for the Federal Reserve: cut rates? Fear of inflation going out of control; not cutting rates? Fear of the economy collapsing directly... The global economic "powder keg" has been lit again! 5. Global markets in a major shake-up! Asset prices experiencing "ice and fire" With the explosion of data, the market went "crazy" right away: US bond yields plummeted (market betting on Fed to cut rates aggressively); US dollar dropped significantly, oil prices dropped (economic expectations worsened, demand weakened); Gold soared (driven by safe-haven demand + rate cut expectations); US stocks plunged heavily (S&P, Nasdaq collectively declined, South Korea's stock market directly plummeted by 4%)... Risk appetite dropped significantly, and assets that have risen considerably started to "pay back", indicating a clear signal for a correction! 6. What's the future direction? These data will decide life and death! Key data will be concentrated in August, with each one potentially influencing the Federal Reserve's decision in September: 5th: Service PMI (showing economic vitality); 12th: CPI (looking to see if inflation is easing); 15th: Retail sales (looking at consumer resilience)... Short-term market volatility expected to rise (trading difficulty), but in the medium to long term, three certain main trends are worth watching: 1. The Federal Reserve's "dovish period" is difficult to reverse Whether it cuts rates in September or not, long-term easing is the general direction (weak economy + difficulty meeting inflation targets). US bond rates, the US dollar index are likely to decline, benefiting gold and non-US currencies. 2. US stocks "correction crash", opportunity to buy on dips The US economy is experiencing a "soft landing" but it's unstable; if the fundamentals are solid, it's just a "correction". Quality assets (tech leaders, core consumer goods) can be gradually accumulated on dips, with favorable odds. 3. Difficult repair of US dollar credibility, "de-dollarization" continues With tariffs and policy uncertainties, the trend of central banks around the world "de-dollarizing" is unstoppable. Gold, and Chinese assets could benefit long-term, serving as a hedging investment. The recent shocks from the non-farm data and tariffs have exposed the vulnerability of the US economy, and also clouded the Federal Reserve's policy direction. Short-term market volatility may intensify, but the medium to long-term trends are already clear: Continuation of the Fed's loose policy; US stocks may correct but the long-term logic remains unchanged; US dollar credibility weakens, non-US assets rise. For ordinary investors, don't be frightened by short-term fluctuations, focus on the main trends, logically invest in assets opportunistically, to navigate through the volatility! Risk warning: Markets are risky, invest cautiously. This article is for information sharing purposes only, and does not constitute investment advice.