🔥The wind has changed direction!! The Federal Reserve's focus is shifting from "fighting inflation" to "maintaining employment".
San Francisco Fed President Daly recently stated that "finding a job is becoming difficult," suggesting that 1-2 rate cuts may be needed this year to support the economy. Vice Chairman Jefferson also issued a warning, reminding that there is a risk of sudden weakness in the labor market. This may indicate that the Federal Reserve's policy pendulum has begun to swing towards the labor market.
The data in the coming week is crucial:
· Non-farm employment: Expected growth is only 60,000 to 80,000. If the data significantly underperforms expectations, rate cut expectations may quickly rise.
· Data revision risks: Some analysts point out that the employment data from the past year may have been overestimated by nearly a million. If there are significant downward revisions, the market will inevitably have to reprice.
· Inflation test: The core CPI for January will reveal whether inflation is persistent. If a combination of "weak employment + stubborn inflation" occurs, various assets may experience volatility.
Currently, the market's expectations for a rate cut in March are low, but nearly fully priced in for July. Do you think the Federal Reserve will be forced to act earlier? Will the economy in the second half of the year smooth out or face greater pressure? Feel free to share your thoughts!
