Macroeconomic Research and Trends

In the last 24 hours, over 170,000 people in the cryptocurrency market have been liquidated. How much inflation risk has this round of correction digested?

The cryptocurrency industry may gradually shift from the hype of native altcoins to real asset tokenization, on-chain machine economy, and a more mature industrialization phase.

The prices in this window are determined by emotions, amplified by leverage, driven by war narratives—rather than by crude oil supply and demand.

The global fixed income head at Morgan Stanley pointed out that the global manufacturing PMI remains strong, the U.S. yield curve is still positively sloped, and the growth rate of bank loans is rising in the U.S., Europe, and Asia. From these key leading indicators, the current sharp adjustment in the U.S. stock market is more likely to be close to a significant clearing of concentrated uncertainties, rather than a precursor to the end of the economic cycle.

The unexpected market trend may have been foreshadowed as early as a month ago. At the same time, a migration of funds across major asset classes is quietly unfolding.

After the non-farm payroll report, traders bet that the probability of a rate hike in December rose to 85%. Wall Street insiders believe the report provides room for further rate hikes, bringing back pressure for rate increases amid market concerns about a slowdown in AI development or weakened rate hike expectations after the midterm elections; some remain cautious about a December rate hike due to stock market volatility and the outlook for AI investments, which may restrain the Federal Reserve. The New Federal Reserve News Agency believes the report did not shake the Fed's judgment on economic growth and inflation, and whether the AI asset sell-off will change financial conditions may become a new variable for the December decision; attention should be paid to whether Waller values lagging employment data or forward-looking market signals.

After the election results were announced, Wall Street's major firms collectively became bullish on U.S. stocks, betting that the reduction of uncertainty would drive a year-end rebound. However, the bullish celebration lasted only one day, as anxiety over AI investment returns triggered a wave of selling, causing the Nasdaq 100 to lose $2.3 trillion in market value in a single day. Even Goldman Sachs' trading desk was caught off guard: their phones were overwhelmed on Wednesday, stating they couldn't see the direction clearly. Wall Street's optimistic bets faced a harsh reality check.

The October non-farm payroll report will debut amid a 6.4% plunge on Nasdaq. Goldman Sachs predicts an increase of 75,000 jobs, higher than market consensus, with the unemployment rate expected to remain at 4.2%. The paradox is that strong data may turn into a nightmare for the market—it will provide ammunition for the Federal Reserve's rate hike in December, adding another "rate bomb" on top of the AI trading collapse and massive sell-offs by CTA funds.

The global market is simultaneously releasing multidimensional extreme signals: the implied volatility of Mag 7 has reached a four-year low, with hedge funds pushing their exposure to the historical 97th percentile; momentum strategies have dropped from extreme overcrowding to nearly zero within months; the South Korean stock market is experiencing a technical rebound after extreme overselling; the profit margin in the U.S. housing market has fallen below pre-pandemic levels; Brazil's debt trajectory may be subject to forced correction. This is not a singular risk, but a structural stress test across assets.

Inflation has soared beyond expectations, yet the market is convinced that the Federal Reserve will remain inactive ahead of the midterm elections. Tonight's decision may see multiple hawkish dissenting votes, but the real focal point will be Chair Waller's press conference: can he clarify the logic of "skipping a rate hike" and avoid a repeat of the communication disaster from July?