Overnight, after the non-farm payroll data came in far below expectations, interest rate cut expectations surged! The market's first reaction was a significant drop in U.S. Treasury yields, the dollar, and the VIX index, while stock, cryptocurrency, and gold prices soared.
However, things began to improve as traders realized that the employment data was not bad enough (excluding hurricane factors) to trigger a &#34;growth panic,&#34; but also sufficient to provide Powell with enough justification to cut rates next week.
Expectations for rate cuts in 2024 (green line) and even 2025 (blue line) began to decline - returning to unchanged (with a projected cut of 108 basis points by the end of 2025).
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/dd06b1fe-f098-4b72-833f-99e70f8fff07.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/dd06b1fe-f098-4b72-833f-99e70f8fff07.jpeg"/>

The overnight non-farm payroll employment data was far below expectations, leading to a sharp rise in interest rate cut expectations. The market reaction saw significant declines in U.S. Treasury yields, the dollar, and the VIX index, while stock, cryptocurrency, and gold prices soared. Subsequently, traders realized that the employment data was not sufficient to trigger a "growth panic," but it was enough to provide Powell with a reason for an interest rate cut. Expectations for rate cuts in 2024 and 2025 began to decline, with a projected cut of 108 basis points by the end of 2025

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