To The Moon

Last week’s note highlighted the need for caution around the nonfarm payrolls report. The data had become more difficult to forecast than usual because payroll figures have been revised frequently in recent years, increasing the likelihood of surprises and larger market swings. The result was indeed a blowout: U.S. Department of Labor data showed that nonfarm employment surged by 162,000 in August, far exceeding the market expectation of 55,000.

This exceptionally strong report once again disrupted the market’s expectations for Federal Reserve policy. The market had previously scaled back expectations of a September rate hike, but the release put rate-hike expectations back in the driver’s seat. The probability of a Fed rate increase in September has now returned to roughly a 60/40 split.

Under normal circumstances, such payroll data should strengthen the market’s conviction that the Fed is entering a tightening phase. However, the November midterm elections are highly significant for Trump. He is concerned that Fed rate hikes could weigh on the economy and push the equity market lower. With payrolls coming in so strong, he wasted no time in pressuring the Fed to cut rates, while threatening to cut off trade with countries that run trade surpluses against the United States if rates are raised. Such a situation has rarely been seen in the past. The market has therefore become cautious, and interest-rate expectations have ultimately remained in a fragile equilibrium. Investors should continue to approach the market prudently.

Source: CME FedWatch Tool — probabilities of Federal Reserve interest-rate changes.

Gold Struggles to Break Prior Highs

The weekly calls on gold have been relatively well timed during this period. We captured the rebound in July and August, flagged that the rally was nearing its end once prices moved above 4,600, and advised taking profits. Last week, we again suggested a short-term rebound trade in gold, which played out as expected.

Going forward, gold’s elevated volatility is likely to moderate gradually as the market awaits the September FOMC decision. Therefore, there are no particularly compelling spot trading levels to highlight before then.

That said, periods like this may actually be better suited to option-selling strategies. Given that gold has already experienced a meaningful pullback, investors may consider sell-put on gold in a manner similar to writing put options on equities, thereby seeking to profit in a range-bound market. The strike price is preferably set near the previous low, around 4,000. Option maturities should not be overly long. Rolling shorter-dated options may reduce returns, but it also lowers uncertainty and risk. Most importantly, positions should be closed before the Federal Reserve meeting to avoid unnecessary losses from event-driven volatility.$黄金主连 2612(GCmain)$ $微黄金主连 2612(MGCmain)$ $1盎司黄金主连 2612(1OZmain)$ $黄金ETF-SPDR(GLD)$ $2倍做多黄金ETF-ProShares(UGL)$ $2倍做空黄金ETF-ProShares(GLL)$

U.S. Equity Index Futures Remain the Most Stable

Trump’s remarks following the blowout payroll report indicate that the pressure he faces ahead of the midterm elections should not be underestimated. He therefore hopes to use executive influence to prevent or delay rate hikes. Consider the implications: if U.S. equity indices were to fall sharply just before the midterm elections, Trump’s Republican Party would likely find it much harder to explain the situation to voters.

From this perspective, U.S. equity index futures remain among the most stable instruments in the current market. From a trading standpoint, Nasdaq futures are still above their 20-week moving average. As noted last week, this level represents the near-term dividing line between bullish and bearish conditions for the index. As long as price remains above it, maintain a short-term bullish stance, with last week’s low of 28,900 serving as the stop-loss level.$纳指100ETF(QQQ)$ $纳斯达克(.IXIC)$ $NQ100指数主连 2609(NQmain)$ $微型NQ100指数主连 2609(MNQmain)$ $标普500ETF(SPY)$ $标普500(.SPX)$ $SP500指数主连 2609(ESmain)$ $微型SP500指数主连 2609(MESmain)$ $标普500波动率指数(VIX)$ $道琼斯指数主连 2609(YMmain)$ $微型道琼斯指数主连 2609(MYMmain)$ $道琼斯(.DJI)$