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December US Nonfarm Payrolls Rise More Than Expected, Unemployment Rate Slows
The biggest obstacle to the Federal Reserve's interest rate cuts in 2025: inflation and Trump.
The anti-inflation process has stagnated, and meanwhile, under Republican control, several Congressional agendas will further increase inflation.
Goldman Sachs strategists warn: The pricing of U.S. stocks is at a "perfect level" and is likely to experience a pullback.
Goldman Sachs' Chief Global Equity Strategist Peter Oppenheimer warned that as investors digest the uncertainty surrounding rising Bond yields, overvaluations, and further interest rate cuts, the current "perfect" earnings market environment may be difficult to sustain.
Tonight's non-farm payroll report is coming! Signals of a slowdown in employment growth have emerged, and the health status of the labor market will soon be revealed.
With the recent continuous rise in the US dollar and US Treasury bond yields, the market is highly focused on the upcoming US non-farm employment data for December, which will be announced at 20:30 Beijing time on Friday.
Quietly, the Federal Reserve has given more attention to this "new" inflation Indicators.
Including Federal Reserve Chairman Powell, senior officials of the Federal Reserve are increasingly focusing on a lesser-known inflation Index—the market-based version of the Personal Consumer Expenditure Price Index, which excludes a range of service industry data that its collectors cannot measure directly and must estimate. Currently, this Index is closer to the Federal Reserve's 2% inflation target, potentially indicating that the threshold for further interest rate cuts is lower than the market anticipates.
The outlook for Trump's policies is uncertain, the Federal Reserve is cautious, and this year the voting committee unanimously supports gradual interest rate cuts.
This year, the voting member and President of the Boston Federal Reserve, Collins, stated that the economic outlook is very uncertain, and requires a gradual and patient approach to interest rate cuts, expecting the number of cuts this year to be reduced to two from previous expectations; another voting member this year, President of the Kansas City Federal Reserve, Schmidt, stated that if economic data improves, it supports gradual rate cuts; the Federal Reserve is close to the neutral interest rate, nearly achieving the dual mandate of inflation and employment, and further balance sheet reduction is needed; the 2026 voting member, President of the Philadelphia Federal Reserve, Harker, stated support for further rate cuts this year, but the timing depends on the data, and action should be paused for now; the 2027 voting member, President of the Richmond Federal Reserve, Barkin, stated that it is the term premium, not inflation, that drives up long-term interest rates.
A 180-degree turn! Goldman Sachs' latest warning: U.S. stocks are priced too "perfectly," and a correction is imminent.
Goldman Sachs issued a new warning on Thursday (January 9): As investors digest the rising Bonds yields, overvalued valuations, and the uncertainty of further interest rate cuts, the current perfect money-making market environment may be difficult to sustain.
What impact do Trump's tariffs have? Federal Reserve officials stated for the first time: Support for further interest rate cuts this year!
①Federal Reserve Governor Waller supports interest rate cuts this year, although he believes that tariffs imposed by the Trump administration may not significantly impact inflation. ②Waller expects the inflation rate to approach the Federal Reserve's 2% target in the coming months and believes that medium-term inflation will continue to move toward 2%.
The Global bond market is experiencing a frantic sell-off, with US Treasury yields quickly approaching 5%.
The 20-year US Treasury yield has already broken through 5%, while the UK 10-Year Treasury Notes Yield has also risen to 4.82%, reaching a new high since 2008. Inflation worries have prompted traders to lower their expectations for interest rate cuts by the Federal Reserve and the Bank of England this year, and at the same time, the market is weighing the impact of President Trump's policies.
The last time the US bonds dropped like this, the US stock market also crashed.
Recently, the rise of the 10-year U.S. Treasury yield is similar to the situation in 2022 and 2023, when the stock market experienced a substantial decline. Goldman Sachs stated that although the U.S. stock market is relatively stable now, the correlation between stock and bond yields has turned negative. If economic data falls short of expectations, the risk of a market correction in the short term may increase.
U.S. stock market closing | Jensen Huang caused a collapse in quantum computing stocks, QUBT fell over 43%; China Concept Stocks fell, Xiaopeng Autos dropped over 5%.
① The Nasdaq China Golden Dragon Index fell by 0.67%, with most China Concept Stocks declining; ② Wildfires ravaged California, and Electrical Utilities provider Edison International fell by 10%; ③ Jensen Huang stated that a "very useful" quantum computer may take several decades to arrive; ④ Intel: will continue to focus on the independent graphics card market.
The Trump team is moving to restructure the leadership of the Federal Reserve, with Bowman likely being promoted to Vice Chair for Financial Regulation, and adjustments made to the list of Powell's successors.
According to media reports citing informed sources, Waller, who became a member of the Federal Reserve Board during Trump's first presidential term, has seen his "advantage" for becoming the chairman of the Federal Reserve significantly decline, as Trump is unhappy with his support for a substantial rate cut last September. Trump's advisory team will closely monitor the current Federal Reserve officials' statements on interest rates to assess who is suitable to take on the role of the next central bank leader.
The Federal Reserve's meeting minutes suggest a pause in interest rate cuts, with "almost all" policymakers believing that Trump's policies may drive up inflation.
The "New Federal Reserve News Agency": The minutes suggest that Fed officials will temporarily keep interest rates unchanged, partly due to Trump's intention to impose tariffs, and they anticipate the risk of inflation being higher than expected.
Oak Tree Capital's Marks: New things are prone to bubbles, currently private equity buying S&P 500, with a 10-year yield of only ±2%.
Max recently released a memorandum titled "Revisiting the Bubble," stating that investors are currently betting on the leading high-tech companies to maintain their dominance. However, he believes that it is not easy to stay ahead, as new technologies and competitors can surpass existing market leaders at any time. When people assume that "things can only get better" and Buy based on that, the impact of negative news can be particularly severe. He specifically pointed out the frenzy over AI and how this positive sentiment may spread to other Technology sectors.
The overseas market will not stop for the Spring Festival! Looking back at the performance of Hong Kong and U.S. stocks during the Spring Festival in the past, will the New Year market see an explosive growth?
According to the News organized by Futu, since 2018, the average probability of an increase in Hong Kong stocks during the New Year period is as high as 80%, while U.S. stocks and Chinese concept stocks have a 70% increase probability.
With U.S. Treasury yields rising like this, should concern be raised for the U.S. stock market?
According to Morgan Stanley's analysis, as the yield on 10-year U.S. treasury bonds rises above 4.5%, it has created pressure on U.S. stock valuations. The correlation between the S&P 500 Index and U.S. treasury yields has turned into a "significant negative correlation." Considering the poor market breadth, the downward pressure on the dollar, and the Federal Reserve's hawkish policy outlook, U.S. stocks may face severe challenges in the next six months.
2024 "Capitol Hill Stock God" performance: dozens of members of Congress outperform the Large Cap stock market, with the highest yield reaching 149%!
① According to a new report, in the recently passed year of 2024, the stock investment portfolios of over 20 USA lawmakers outperformed the Large Cap; ② Congressman David Rouzer had the highest investment portfolio return, reaching 149%; ③ This has once again raised concerns about insider trading among congressional members.
U.S. stocks closed | All three major Indexes fell, with the Nasdaq down nearly 2%; Technology stocks declined, with NVIDIA dropping over 6% and Tesla falling over 4%; some Chinese concept stocks went against the trend, with Xiaopeng rising over 9%.
① The Nasdaq China Golden Dragon Index fell by 0.2%, with China Concept Stocks showing mixed results; ② NVIDIA launched its personal computing product Project DIGITS; ③ XPENG Huaitian: Flying cars will be mass-produced and delivered in 2026; ④ Vaccine stocks soared, with Moderna rising nearly 12% and Novavax increasing by nearly 11%.
Is inflation returning? Economic data causes market fluctuations, with the NASDAQ and S&P 500 Index experiencing corrections.
The release of two economic data points led to a surge in yields and a sharp decline in the stock market.