Introduction

The U.S. economy is facing an "unemployment storm," with the number of first-time unemployment benefit claims soaring to a one-year high, intensifying market concerns about the future. How will the Federal Reserve respond to this situation?

U.S. First-Time Unemployment Claims Soar to One-Year High

Recent developments in the U.S. economy have been closely watched by the market. According to surveys, nearly 65% of Americans believe the economy is in recession.

Previously, the U.S. non-farm employment data for August was bleak, falling short of expectations, triggering market concerns about the future of the U.S. economy.

The latest first-time unemployment benefit claims data also caught the market off guard, not only exceeding expectations but also setting a one-year high.

This further confirms the American public's worries about a recession, and the poor performance of the data further proves that the U.S. economy is in a downturn.

The Federal Reserve was already under pressure to cut interest rates, and such data performance has further pushed it to the forefront.

At present, the market's expectations for a Federal Reserve rate cut in November are also continuously rising, while the Federal Reserve's previous hawkish tone has caused investors to be skeptical.Now that the US economy is once again mired in difficulties, can the Federal Reserve remain on the sidelines and continue to pause interest rate cuts?

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How should investors view the current situation and prepare for the upcoming drastic adjustments in the economy and financial markets?

Will the Federal Reserve continue to cut interest rates in November?

The recent surge in initial jobless claims to a one-year high undoubtedly exacerbates the downward pressure on the US economy and pushes the question of whether the Federal Reserve will continue to cut interest rates in November to the forefront.

In September, the Federal Reserve announced a 25 basis point rate cut, attributing the move to a slowdown in global economic growth and escalating trade tensions.

In early October, as cross-border trade tensions eased somewhat, market expectations for the Federal Reserve to continue cutting rates in November also gradually cooled.

However, the recently released initial jobless claims data caught everyone by surprise, not only significantly exceeding expectations but also reaching a new high in a year.

Facing the phenomenon that nearly 65% of Americans believe the economy is in recession, the Federal Reserve must cut interest rates to maintain the US economy and job market.

Can the Federal Reserve withstand the pressure and pause interest rate cuts at present?Will the Federal Reserve Pause Interest Rate Cuts?

Both domestic and external environments in the United States are currently exerting significant pressure on the Federal Reserve to lower interest rates, pushing the probability of pausing rate cuts to its highest point.

Internally, recent U.S. economic data have been consistently weak, with initial unemployment claims reaching a one-year high. This evidence suggests that the U.S. economy is in a downward trend, and if the Federal Reserve does not take appropriate measures, it could lead to more severe consequences.

Externally, there has been progress in recent U.S.-China trade negotiations. Although no final agreement has been reached, the market holds an optimistic outlook. If the U.S.-China trade situation eases, the market will also have a positive outlook on the global economic growth prospects.

If the Federal Reserve maintains a hawkish stance and pauses interest rate cuts at this time, it could lead to significant fluctuations in the financial markets. This would undoubtedly undermine investor confidence and affect future economic development.

Therefore, to avoid drastic fluctuations in the financial markets and to maintain the stable development of the U.S. economy, pausing interest rate cuts is undoubtedly a wise move.How Should Investors Respond?

Faced with such a complex and rapidly changing global situation, how should investors prepare and guard against the upcoming drastic adjustments in the economy and financial markets?

It is essential to closely monitor the latest developments from the Federal Reserve. Pay close attention to the outcomes and the release of statements during the monetary policy meetings held on October 31st and November 1st.

Should the Federal Reserve indeed pause interest rate cuts, it would undoubtedly have a significant impact on global financial markets.

If you hold equity products such as stocks and bonds, consider buying on dips in early November when stock and bond markets are likely to experience greater volatility.

If you hold real estate, commodities, and other tangible products, consider buying on dips in early November when prices may fluctuate significantly.

If you hold safe-haven products such as foreign exchange and gold, consider adding to your positions on dips.

If you hold other products, consider closing positions in a timely manner to realize profits or cut losses.

During the upcoming period of economic and financial market adjustments, closely monitoring market trends and making decisions based on your own circumstances is the key.Why has the US Dollar Index remained strong recently?

Facing numerous internal and external pressures and expectations, why does the US Dollar Index still maintain its strength at this time?

In fact, there may be a powerful and subtle force at work behind the scenes - whether the Federal Reserve has exploited the reversal of interest rate cut expectations?

Currently, there are two main forces supporting the operation of the global financial market - dollar liquidity and confidence.

The aforementioned data and events have undoubtedly dealt a heavy blow to these two forces - the number of first-time unemployment benefit applications soared to a one-year high, and the monetary policies of major central banks around the world are all trending towards easing...

Faced with such a complex and changeable global situation and variables, investors also find it hard to believe how they should deal with future development trends.

As a result, many investors have also started to sell assets for cash and turn to buy safe-haven products, including the US dollar.

The Federal Reserve may have seen this point and paused interest rate cuts under internal and external pressures, using this news to boost investor confidence.

This will undoubtedly further enhance the status of the US dollar in the global financial market and prevent a large-scale capital retreat.However, there is a significant risk inherent in doing so—whether the credit debt bubble can be controlled?

In recent years, the credit debt bubble has taken shape

Credit debt, as a large-scale and systemic financing method in the world economic development in recent years, has to some extent driven the development of the world economy.

But its systemic strength is accompanied by an equally large-scale risk hazard, which can even trigger a systemic financial crisis under abnormal conditions.

At present, a huge bubble has already formed within the field of credit debt, and the risks are gradually increasing.

The five-year credit default swap (CDS) price reflects investors' expectations of sovereign debt default risk, and it has recently reached the highest level since last June.

This also indicates that investors' concerns about sovereign debt default risks are intensifying and have become a current barometer of financial troubles and the coming winter.

Looking at the current U.S. sovereign debt situation, insiders revealed that the U.S. fiscal year ending on September 30, 2020, had a deficit of $984 billion,

which expanded by 26% year-on-year. According to previously leaked information, the deficit could reach between $1.1 trillion and $1.2 trillion.This all signifies that the deficit for the current fiscal year 2020 has already surpassed the trillion-dollar mark.

Adding to this, the current sovereign debt total of 5.7 trillion is massive and is growing at a rate of tens of millions of dollars per hour,

just the interest payments alone have exceeded 200 billion US dollars. Such a vast and rapidly increasing debt situation is enough to make one's heart tremble with fear.

However, in the face of such a massive, rapidly growing, and costly debt bubble that cannot be curbed despite the heavy price paid,

Wall Street seems to not feel the immense risk it contains. Are there hidden dangers behind its operations?

Behind Wall Street's "feigned ignorance"

According to previous forecast results, the deficit for the fiscal year 2024 may reach between 1.1 trillion and 1.2 trillion,

which undoubtedly further proves that analysts' estimates of a 1.9 trillion deficit for the fiscal year 2024 are credible.

According to the latest news: as of the closing price on October 9th, the opening price on the 10th, and the closing price on the 10th.The three major U.S. stock indices experienced minor declines: the S&P 500 closed down by 0.20%, at 2,938.79 points;

The Dow Jones Industrial Average closed down by 0.08%, at 26,164.04 points;

The Nasdaq Composite closed down by 0.30%, at 7,932.05 points;

However, in contrast, the price of the 5-year credit default swap (CDS) increased by 3%,

Currently priced at 40.5 basis points per year, it is at a new high level since last June. This undoubtedly once again illustrates the rising credit default risk,

And has become a barometer for the current market's vulnerability and the impending economic winter. Coupled with the fact that the market is already in the late stage of a bull run,

Wouldn't it be self-destructive to withdraw funds on a large scale at this time? Is Wall Street unaware of the significant risks involved?

Why does Wall Street "turn a deaf ear"?

In fact, this may be the result of Wall Street's own interests and target setting hidden behind the scenes.At present, the global market is in the late stage of a bull market, and the trade situation between China and the U.S. has also eased to some extent. This undoubtedly provides a rare opportunity for Wall Street to cash out and exit. However, with the recent news of monetary policy easing from several major central banks around the world, both the stock market and bond market have risen synchronously, making it difficult to cash out and leave. As a result, Wall Street can only hope for a "black swan" event to occur as soon as possible, or for a "white swan" event to be announced quickly, allowing the stock market to fall rapidly and enabling them to escape the storm.

Therefore, if warnings are urgently issued at this time, it will undoubtedly trigger investors' increased concerns about future uncertainties and lead to a rapid decline in the stock market. If both the stock market and bond market fall synchronously, it is likely to trigger the current state of stock erosion and the coming of winter, leading to a larger-scale capital withdrawal. Once Wall Street truly "feigns deafness and dumbness," it may lead to more serious consequences.