Original | Odaily Planet Daily ( @OdailyChina )

By Golem ( @web3_golem )

On September 25th, global markets experienced a minor tremor. The yield spread between US 5-year and 30-year Treasury bonds fell below 100 basis points for the first time since August 11th. The three major US stock market indices closed lower, with the Dow Jones Industrial Average initially down 0.38%, the S&P 500 down 0.5%, and the Nasdaq Composite down 0.5%. Several major cryptocurrencies lost ground. BTC fell below $110,000, hitting a low of $108,631, a 24-hour drop of over 2.95%. ETH fell below $4,000, hitting a low of $3,815, though this morning it recovered some of its losses, falling 3.5% in the past 24 hours. Solver (SOL) fell below $200, hitting a low of $191.32, a 24-hour drop of over 6.4%. The altcoin market also presented a challenging situation. According to data from Quantifycrypto, the majority of the top 200 cryptocurrencies by market capitalization were in a 24-hour downtrend.

According to Coinglass data, the total amount of liquidated positions in the derivatives market reached $1.178 billion in the past 24 hours, of which $1.06 billion was caused by long positions. ETH was the hardest hit by liquidations, with a total of $439 million, and BTC liquidations amounted to approximately $277 million.

Employment data slows, raising concerns about interest rate cuts

The market's decline was primarily driven by the release of initial jobless claims, leading investors to believe that employment data is slowing, reducing the urgency for the Federal Reserve to cut interest rates. On September 25, the U.S. Department of Labor announced that initial jobless claims for the week ending September 20 were 218,000, compared to 231,000 in the previous week and expectations of 235,000. This was the lowest number since the week ending July 19, 2025.

Initial jobless claims, the number of people applying for unemployment benefits for the first time each week, is a high-frequency indicator often used by economists and traders as a leading signal for the short-term labor market and layoff trends. The data released this time was better than generally expected, indicating that employment has not continued to deteriorate and the labor market remains strong. It also suggests that the urgency of the Federal Reserve's interest rate cuts has decreased.

Expectations of interest rate cuts have been priced in multiple times since August, leading to minimal market volatility following the Fed's 25 basis point rate cut announcement on September 18th. Investors were betting on the Fed's subsequent policy direction ( the Fed cut by 25 basis points as planned, but why was the market reaction so muted? ) . However, Powell's remarks following the announcement were extremely cautious, describing the rate cut as a risk-management measure and attributing the decision primarily to the judgment that the rise in inflation was only temporarily triggered by tariffs. However, if the impact of inflation proves more persistent, the Fed might reconsider its increased focus on inflation.

The Federal Reserve's responsibility is to maintain a balance between employment and inflation, but this year's unique situation of "a weak labor market and rising inflation" has led to significant divisions within the Fed. Fed Governor Milan, a vocal advocate for rate cuts, stated, "If we don't lower interest rates quickly, the Fed risks damaging the economy. We could cut rates by 50 basis points in a short period of time and then readjust monetary policy. Once we achieve our goals, we would move more cautiously." However, Fed Governor Goolsbee, who held opposing views, expressed concern, saying, "The job market appears to be cooling, inflation is rising, and there is some unease about prematurely implementing too many rate cuts based on slowing employment data."

Rumors of rising inflation are not groundless. In addition to initial jobless claims, the US also released the second-quarter core PCE price index on September 25th, a measure of long-term inflation trends. The final annualized quarterly rate for the core PCE price index was 2.6%, compared to the previous reading of 2.50% and the expected reading of 2.5%. This data release was slightly higher than both expectations and the previous reading, indicating that inflation is accelerating faster than market expectations. While a single 0.1pp increase would not normally result in an immediate shift in monetary policy direction, during this period of investor uncertainty, any news that isn't positive could potentially become a significant negative for sentiment.

Which side will Powell ultimately lean towards? Previously, the market considered a Fed rate cut a foregone conclusion, with investors generally betting on several more cuts this year. However, the release of two major data points on September 25th weakened market confidence in rate cuts. According to CME's "FedWatch," the probability of a 25 basis point Fed rate cut in October has fallen to 85.5%, down from 91.1% the day before.

The international situation is turbulent and US-Russia relations are tense.

Whenever international turmoil strikes, investors' wallets are the first to be hit before the missiles even land. Besides the market setback caused by the increasing uncertainty surrounding the Federal Reserve's interest rate cuts, the sudden shift in international relations and the strained US-Russia relations on September 25th also contributed to investors' losses.

On September 25th, US and Russian air forces engaged in a "clash" in Alaska. NORAD stated in a statement that US fighter jets scrambled on the 24th to identify and intercept four Russian aircraft flying near Alaska. NORAD said the Russians dispatched two Tu-95 long-range strategic bombers and two Su-35 fighter jets. On the same day, US Secretary of Defense Hegseth convened a meeting of top military commanders for early next week, but did not specify the reason for the meeting.

On September 26, NATO also issued a stern warning to Russia. According to officials familiar with the matter, European diplomats warned the Kremlin this week that NATO is prepared to use all military options, including shooting down Russian aircraft, in response to further Russian airspace violations. Meanwhile, Germany conducted military exercises focusing on deploying troops to NATO's eastern flank, hinting at Russia as the hypothetical enemy. If border conflicts between Baltic states escalate, troops will be deployed to the Russian border via the port of Hamburg.

US President Trump's stance toward Russia has also undergone a dramatic shift. On the one hand, Trump urged Turkey to stop buying Russian oil and hinted that he might lift the ban on Turkey's purchase of US F-35 fighter jets. Turkey was Russia's fourth-largest trading partner in 2024, with bilateral trade reaching $52 billion, primarily in fossil fuels and electronics. On the other hand, Trump spoke out in support of Ukraine, suggesting that Ukraine has the opportunity to retake territory. Meanwhile, NATO Secretary-General Mark Rutte stated that he would see a continued influx of US arms into Ukraine.

Prior to the US-Russia conflict and Trump's shift in tone, Trump had long played a pro-peace role in the Russia-Ukraine conflict, pushing Russia and Ukraine for negotiations and a ceasefire, even at the expense of some NATO interests. However, on the same day that Ukrainian forces attacked Russian ports and military targets, he suddenly reversed course and sided with Ukraine. Although Russia did not respond specifically, this may indicate a deterioration in US-Russia relations.

As major global military powers, if the United States and NATO were to join or interfere in the Russia-Ukraine conflict, it would have even more severe adverse impacts on the global economy and politics. Fortunately, no actual military conflict has yet occurred between the US and Russia, and there is still hope for easing the international situation. However, investors may lose their accounts forever.