On the evening of April 6, Beijing time, the United States announced the number of initial jobless claims for the week ending April 1.。Data shows that the number of first-time claims for unemployment benefits in the United States last week was 22.80,000, the highest since the week of December 3, 2022。Estimated at 200,000, with a previous value of 19.80,000, revised to 24.60,000 people。

AAfter DP, the initial request data fell short of expectations again.

Faced with more than expected initial request data, the market was quite surprised。U.S. stock index futures edged lower after the data, while Nasdaq futures fell 0.43%, S & P 500 futures down 0.15%, Dow futures turn down 0.07%, dollar index DXY short-term up more than 10 points。

Goldman Sachs says surge in US initial jobless claims not surprising due to seasonal adjustment。Analysts warn that initial claims could soar to 240,000 after a future quarterly adjustment (which analysts believe is an artificial reduction in initial claims)。

In addition, the US ADP data for March, also released this week, was not as good as expected.。The data showed that the number of new jobs created in the United States last month was much lower than expected and wage increases slowed, with some analysts pointing to a saturation of the U.S. labor market.。

Indeed economist Nick Bunker said the U.S. labor market is cooling significantly, as evidenced by job openings falling by about 1.3 million in two months.。

The US economic outlook has been dusty after a series of blows.

Two consecutive important data are less than expected, superimposed on a series of recent events, the U.S. economic outlook has become more confusing。

First, the impact of bank risk events is unknown。The "flash crash" of Silicon Valley banks shocked the market, and lurking behind this shock is more uncertainty about the extent of the impact on the entire financial system, as well as pessimistic expectations about the future economic outlook.。While such concerns have improved slightly with the timely intervention of the government to actively rescue the market, the consequences of this type of crisis often take time to emerge.。

One of these is that the cost of borrowing funds for banks is likely to rise.。

JPMorgan CEO Jamie Dimon made a point in his shareholder letter this week that he believes the banking crisis is still ongoing and its effects will last for years.。He said the recent events were completely different from those that occurred during the 2008 global financial crisis, as they had barely affected regional banks at the time.。He also said that the crisis had caused a lot of unease in the markets and that as banks and other lenders became more conservative, it was clear that it would lead to tighter financial conditions and an increased likelihood of a recession.。

Craig Erlam, senior market analyst at Oanda, also said it was too early to assess the impact of the crisis and needed to focus on long-term trends in credit costs.。

In addition, after this incident, it is not ruled out that the U.S. authorities will intensify their oversight of the funds regulator.。Already, it has been reported that the U.S. Senate and House of Representatives are holding hearings to question regulators about the loopholes, and that the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) will submit their investigation reports by the 1st of next month。

Secondly, since the epidemic has improved, the continued and aggressive policy of raising interest rates in various countries has also cast a cloud over the world's future economic prospects.。

The International Monetary Fund (IMF) expects the global economy to grow at about 3 per cent over the next five years, eroded by rising interest rates, which would be the lowest five-year forecast since 1990 and significantly lower than in the past two decades..8% average。

In other words, the IMF's forecast for the future global outlook is darker than it was during the 2008 financial crisis and the bursting of the dotcom bubble in 2000.。

About 90 percent of advanced economies are expected to see slower growth this year as tight monetary policy suppresses demand and slows economic activity in the United States and the euro zone, the IMF said.。Some emerging markets are expected to perform strongly, especially in Asia, where India and China are expected to account for half of global growth.。However, per capita income growth in low-income countries, dragged down by weaker export demand, remains lower than in emerging economies.。Poverty and hunger, which have already increased during the neo-crown epidemic, are likely to increase.。

IMF Managing Director Kristalina Georgieva said geopolitical tensions were rising, inflation remained high and a strong recovery was still a long way off.。This hurts everyone's prospects, especially for the most vulnerable people and the most vulnerable countries.。While the growth outlook is bleak, as long as financial stability pressures remain limited after the banking turmoil in the U.S. and Switzerland, high inflation means central banks must continue to raise interest rates。

Thus it can be seen，The IMF's gloomy forecast for the economic outlook is based not only on the fact that countries have already raised interest rates, but also on its expectations of strong rate hikes by central banks.。

Since March last year, the Fed has raised interest rates nine times in a row, totaling 475 basis points.。After the recent Silicon Valley Bank and Signature Bank events, the Federal Reserve announced on March 22 that it would raise its target range for the federal funds rate by 25 basis points to 4.Between 75% and 5%, the highest level since September 2007。

Finally, the "short-term forward spreads" on which the Fed has been relying also plunged to new lows on Thursday.。

Some media said that the Fed believes that 18 months after the Treasury bill forward rate and the current three-month Treasury bill yield compared to the "short-term forward spread" is the most reliable bond market signal that the economy is about to contract, this spread has been in negative territory since November last year, and this week plunged to a new low, close to -170 basis points on Thursday。

Fed Chairman Jerome Powell (Jerome Powell) said in March last year that if this short-term Treasury bill forward spread inverted, it could mean the Fed needs to cut interest rates.。Refinitiv's data shows that the curve is currently inverted to the greatest extent since at least 2007.。

On the one hand, the Fed at the beginning of last year in order to suppress high inflation, at the expense of decades of aggressive interest rate hike cycle, although effective but not yet to the target level, it is a pity to give up all previous efforts;。

As a result, the topic of whether or not to end the rate hike has once again been put on the table and is getting worse.。

 

The pigeon-eagle dispute is intensifying, non-agricultural data may be the last straw.

There are not a few bullish views on the end of the Fed's rate hike cycle.。

Peter Schiff, chief economist and global strategist at Euro Pacific Capital, believes that further cuts in interest rates are possible.。He said the U.S. trade deficit rose to $70.5 billion in February, higher than expectations of $68.7 billion.。This will put downward pressure on GDP and the dollar and upward pressure on consumer prices.。

Stephen Jen, chief executive of British hedge fund Eurizon SLJ Capital, said the dollar could fall another 10 to 15 percent in the next year and a half as inflation cools and the Fed is likely to cut interest rates.。He also said inflation risks in the U.S. and globally are heavily skewed to the downside because the Fed has already taken so many tightening measures.。

ABN Amro analyst Chris Turner also said in a report that investors are concerned about the possibility of the Fed cutting interest rates later this year as market pressures ease.。

On the other hand, there is no shortage of hawkish views in the market, many of which include some Fed officials。

Recently, Cleveland Fed President Mester (Loretta Mester) said that in order to keep inflation on a sustained downward trajectory of 2% and keep inflation expectations unchanged, she expects monetary policy to move further into the limit this year, with final interest rates above 5%。

St. Louis Fed President Bullard (James Bullard) believes that OPEC + production cuts may make the Fed's work against inflation "more difficult," the Fed should raise interest rates to 5.5% -5.75% range, which is higher than the previous Fed's 5% -5.25% of median forecast。

Brad, known as the "Eagle King," also said that one of the biggest risks to the U.S. economy is that inflation is now becoming entrenched.。

Yuxin Bank also said that the market no longer expects the Fed to raise interest rates further, but expects it to cut interest rates by about 75 basis points by the end of this year and another 125 basis points in 2024, a rate cut that is too high.。The bank said it needs to see substantial progress in core inflation falling to 2% before the Fed considers cutting rates, so policy rates could remain at peak levels for longer than the market currently expects.。

According to the latest CME Fed Watch data, the market forecasts a probability of the Fed keeping interest rates unchanged in May of 48.6%, the probability of a 25 basis point rate hike is 51.4%。

The two factions wrestle, and the upcoming non-farm data may be the last straw.。

On Friday night, the U.S. non-farm payrolls will be released after the March quarter adjustment, which is considered to be the key reference for the Fed's monetary policy adjustment.。If the data continues to fall short of expectations, perhaps a major inflection point for the U.S. economy will signal。

According to analyst Erham, there are growing signals that recession pressures are emerging。The risk is that the Fed tightens monetary policy excessively to curb inflation, causing the shock to spread to more sectors of the economy。With less than four weeks to go before next month's rate meeting, if economic data continues to cool, there's reason to believe the FOMC will be ready to end the rate hike cycle。

On one side is fierce inflation, on the other side is gradually slowing economic data, in the end how to weigh, I believe the Fed will soon give an answer。

Obviously, this answer may not satisfy everyone.。