This round of dollar interest rate cuts is different from any previous one, it is simply wonderful, in the face of domestic and foreign chaos, what should United States do?
In fact, the powerful United States not only has the means, but there are two, but this time the choice is not in their hands, but China has made the decision for them. So, will the dollar cut interest rates unusually in October? How much will interest rates be cut in November?
Before the end of this year, the Fed has two interest rate meetings in November and December, and there is no interest rate meeting in October, so if it cuts interest rates in October, it will be unusual.
If it were to cut interest rates in October, the Biden administration would have to come up with very poor economic data to smash the market and force the Fed to cut interest rates, just as they revised down the number of nonfarm payrolls for the past year by 818,000 at the end of August.
So yesterday we said that the two economic data released by the United States a few days ago were very good, is it possible that the non-farm payrolls data in the evening will suddenly come to a tragic end?
One netizen commented that it is more likely that the non-farm payrolls data is booming.
Sure enough, last night's data was announced, we were wrong, netizens guessed right, the data is simply more prosperous than prosperity.
On October 4, the United States Bureau of Labor Statistics released data showing that nonfarm payrolls increased by 254,000 in September, far exceeding expectations of 150,000, and the unemployment rate in September was 4.1%, lower than expectations and the previous value of 4.2%.
This data is simply amazing, the non-farm payrolls are the highest in the last 6 months, and the unemployment rate has also fallen, which is too strong!
Earlier, we said that the two economic data released the other day were very good.
One was that job openings in the United States rose to 8.04 million in August, the highest level in three months, after 7.71 million in July.
The other is that the ADP employment in September was 143,000, better than the expected 120,000, and the previous value was also revised upward from 99,000 to 103,000.
One expert commented that the current three data show that the United States labor market is still strong and the economic situation is good, indicating that the Bureau of Labor Statistics is still betting on Harris.
It's a bit of a turnaround, and the Bureau of Labor Statistics is the Biden administration, and their bet on Harris is inevitable. But if you bet on Harris, shouldn't you get a particularly bad data and force the Fed to cut interest rates faster?
Now that the Democratic Harris election is very bad, isn't the Democratic Party in a hurry to make a big move?
Let's change our thinking and sort out the logic in this, which is actually not difficult to understand.
The other day we said that in the face of the pressure of a depreciating dollar and accelerating capital flight, a strong Fed can do two things.
The first option is to slow down or even pause rate cuts, which is very much in line with the core idea of Powell's last two speeches, in which he repeatedly stressed that the United States economy is still strong and the Fed is not in a hurry to cut rates.
The Fed's slowdown in interest rate cuts, coupled with the sacrifice of the yen's depreciation, will stabilize the dollar index, capital will wait and see how to slow down the flight, and the United States economy will have a chance of a soft landing.
The second option is to accelerate interest rate cuts, which are faster than the depreciation of the dollar and capital flight, why is this also effective?
United States capital escapes, the Fed will cut interest rates more vigorously to replenish more dollars to the market and avoid the collapse of United States stock market, bond market, foreign exchange market, and small and medium-sized banks.
Even if there are economic or financial problems at home, as long as capital harvests enough wealth in the world, the United States economy can be revived with full blood.
In fact, this method is the operation method of the United States who have cut interest rates in the past, and through this circular water release method, they sharpened the sickle of the dollar interest rate cut extremely sharp, cut the world all over the body, but they sucked blood, and the United States economy returned to strong growth.
This is the familiar routine: the dollar cuts interest rates, capital goes to the world to find targets, the Fed prints dollars to replenish ammunition in the back, and the United States reaps the world with cheap dollars.
However, this time the United States actually chose the first way! They want to slow down the pace of rate cuts, not only will they not be unconventional in October, but they will cut rates by a maximum of 25 basis points in November.
As soon as the non-farm payrolls data for September came out, the CME Fed Watch tool showed that the probability of a 25 basis point rate cut in November quickly soared to 89.4% from 62.5% previously, and the probability of a 50 basis point rate cut fell from 37.5% to 10.6%.
The consequence of slowing down the pace of interest rate cuts is that the sickle of the dollar rate cut becomes dull, and the United States will have nothing to gain and will suffer heavy losses.
Why slow down the pace of rate cuts, rather than speed up the harvest as in the past? Because the world has changed.
The most important change is that China has changed from being the object of harvesting in the past to harvesting in reverse, China's assets are rising frighteningly, and global capital is rapidly pouring to the East.
If the dollar accelerates interest rate cuts, with China's huge size, it is possible to suck the United States dry at once, which frightens Americans.
The only way for United States to block Chinese assets is to slow down interest rate cuts and prevent dollars from investing in China, such as the "Patriot Investment Act" introduced by the United States Congress.
Although Harris's current election is very unfavorable, the big chaebols behind the scenes of United States do not agree to accelerate interest rate cuts and releases, and the Democratic Party has to turn to maintaining the economic image of the Biden administration, which is one of the areas that Republicans have attacked the most recently.
In order to block Chinese assets with all its might, the dollar cut interest rate was scrapped.