The non-farm payroll report last Friday was somewhat flat, and there is still a high chance of a rate cut in December. The overall non-farm employment data was slightly higher than expected, but the weak data from the previous month (only 12,000) was almost not revised upward, indicating that there are indeed some signs of weakness in the job market, but the slightly higher unemployment rate shows that the job market is gradually cooling down and has not deteriorated significantly. In the current positive risk background, this provides support for the Fed to cut rates again in December. The market currently expects an 85% chance of a 25-basis-point rate cut in December, and about a 30% chance of another rate cut in January.
Bond volatility has fallen to a multi-year low, and yields have fallen further, with the 2-year yield approaching 4% and the 10-year yield returning to 4.15%. Before the FOMC meeting, the market will welcome the release of CPI and PPI data, which are the last few important economic data before the end of the year. With the gradual formation of the Trump 2.0 policy, the yield curve may steepen again.
In terms of the US stock market, due to the positive data and dovish performance of the bond market, US stocks have once again approached historical highs. The technical aspect still has support, the Nasdaq index continues to move upward to the right, and the number of 52-week highs is still higher than the number of lows, with the stock market as a whole rising.
Interestingly, risk appetite is so widespread that growth stocks have once again outperformed value stocks, which is relatively rare in the late stage of economic growth. Is this a reverse signal of the current overheated market, or an early sign that the market may usher in a new round of upward movement in January? One thing is certain, in the current market, any form of short position faces huge risks...
In the cryptocurrency sector, all indicators are broadly positive, with BTC closing again around $100,000, and ETH expected to break through $4,000. ETF inflows are huge, with BTC ETF and ETH ETF adding $2.7 billion and $800 million respectively, with positive inflows for 10 consecutive days. Inflows from TradFi are still the dominant factor behind the spot performance, with cumulative inflows of about $12 billion since the election. At the same time, Blackrock and Microstrategy have quietly become the largest BTC holders in the market, collectively holding nearly 1 million BTC, permanently changing the supply and pattern of the market.
Finally, as the bullish sentiment in the market continues, the funding rates of perpetual contracts are still relatively high, with the annualized rates of major exchanges exceeding 20%. The BTC volatility curve also shows a strong bullish bias, but short-selling strategies are still popular, and overall volatility remains stable.
