Give me two minutes, I will explain how US unemployment data will affect the market
US unemployment rate: 4.6%
The forecast was 4.5%.
A small loss but the message is big.
The labor market clearly shows signs of weakening. This is negative for economic growth and risk assets in the short term, although it strengthens the argument for a future rate cut.
Here things get complicated.
Eyes are now on the CPI data on Thursday 👀
If the inflation rate comes in lower than expected, the markets are likely to welcome it. Expectations for a rate cut are strengthened, and risk assets can breathe.
But if inflation accelerates again, the Federal Reserve will be in a tough spot.
They can't fight rising inflation and protect a weak labor market at the same time. This is the dilemma.
Rising consumer price index + increasing unemployment is the worst combination.
It forces a more tightening policy when the economy is already slowing down.
If the consumer price index data is higher than expected on Thursday, be prepared for a sharp move downward 📉
Volatility is coming. Be careful, manage risk, and don't relax
