ALERT: Federal Reserve Cancels Rate Hike?!?
In a Nutshell
Bad jobs data (–23k vs +85k expected) crushed the odds of a Fed rate hike, sending the Nasdaq up 1%. A weakening labor market now outweighs inflation fears, so traders are celebrating a pause—or better yet, a future cut—over any further tightening. Meanwhile, Japanese bond yields are spiking, prompting the first U.S. Treasury intervention in 28 years to keep Japan from dumping U.S. bonds and pushing yields higher.
These notes were generated by AI and may contain inaccuracies.
The market is reacting to the probability of a rate cut instead of a rate hike. The NASDAQ market is up 1%. The economic calendar in the description contains the economic report that was released today.
Non-farm payrolls showed 23,000 jobs were removed. The expectation was 85,000 jobs to be added. The unemployment rate came in lower than expected. Private non-farm payrolls showed 30,000 jobs were added when the expectation was 78,000 jobs.
Markets have been uncertain about inflation rising. Kevin Walsh, head of the Federal Reserve, and other Fed members have discussed that if inflation continues to rise, rates might need to be hiked. Raising interest rates is not bullish for the market. The US economy lost 23,000 jobs when it expected to add 80,000 jobs.
Jerome Powell called the situation a double-edged sword. Raising interest rates can help inflation but weakens the labor market. A weaker labor market puts the Fed in a position where they are less likely to raise rates because it would worsen the labor market. If the labor market becomes more pressing than inflation, the Fed will prioritize the labor market and therefore stop raising rates.
The likelihood and probability of an interest rate hike just dropped, which is celebratory for the overall market. Markets want rate cuts but will take a rate pause at this point.
A trade was taken on Palunteer with a short position opened too early. The position remains in early stages with no plans to add more unless an active drop occurs. Markets have been resilient, requiring confirmation of an overall reversal before adding to the position.
Chip stocks began showing selling pressure at market open with lower lows and lower highs. This occurred with Micron, SanDisk, and Western Digital. The selling pressure may be related to uncertainty in the South Korean market.
Japanese bonds are going parabolic. The two-year yield hit fresh multi-decade highs. This situation resembles August 2024 when the carry trade began to unfold. The issue unfolding in the Japanese market is not good.
US Treasury is intervening to help the Japanese market. Japan is one of the largest foreign holders of US bonds. If Japan must start selling US bonds, US yields would go higher, which the US does not want. This marks one of the first interventions in the past 28 years due to uncertainty in the Japanese market.
SpaceX is up 13% on the day, nearly back to IPO highs. Extreme volatility comes with extreme risk. When reaching overbought levels, avoid using leverage and watch exposure levels. When in doubt, cash out if the intention was to trade.
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