SignalPlus Macro Analysis (20240311): The economic recession is resurfacing, and BTC is challenging the $70,000 mark again
The non-farm payrolls announced last Friday increased significantly by +275,000 in February, but the previous value was significantly revised down by 167,000. The unemployment rate also surged from 3.7% to 3.9%, while the average hourly wage also increased from the previous 0.5%. to just 0.1%, slowing annual growth from 4.5% to 4.3%.
Although the media may focus more on the higher-than-expected employment change, most economists pointed out that the report was actually weak considering the sharp downward revision to the previous value and the soaring unemployment rate. In addition, Citi pointed out that (the strong job market) is showing worrying cracks, and the 3-month average unemployment rate may be 0.5% above the recent 12-month low, which is an early sign of economic recession (“Sasa”). Sahm Rule).
U.S. Treasury yields were under pressure (down) for much of Friday as the market began to reassess the possibility of a recession as the non-farm payrolls data disappointed, with the one-year SOFR rate moving lower and concerns over what the European Central Bank would do. Rumors of more aggressive rate cuts also helped support bond prices. On the other hand, higher-than-expected inflation and wage growth in Japan may force the Bank of Japan to end its negative interest rate policy in March, pushing USD/JPY below 147 and pushing the U.S. 10-year yield back toward 4%.
The focus this week will be on the US CPI data released tomorrow. The data results may make the Federal Reserve worried again. The core CPI may continue to rebound from the level in January. The Cleveland Fed predicts that the overall CPI will increase by 0.43% month-on-month in February. The CPI increased by 0.32% month-on-month, and both showed an upward trend. Among them, the super core CPI looked particularly worrying.
Risk assets saw a correction last Friday afternoon, with the semiconductor sector falling 4% from its highs, value stocks outperforming, and the dollar rising, while BTC has yet to re-challenge $70,000. Complacency remains high in the market, with Bloomberg reporting that investors have been increasing short volatility trading for much of the past 2.5 years, with assets under management for short volatility ETFs quadrupling in the past 2 years to 640 One hundred million U.S. dollars.
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