"US Economy Beats Expectations: Fed May Hold Off on Rate Cuts"

No more rate cuts?

According to the latest U.S. non-farm employment report, 303,000 new jobs were added in March, marking the highest increase since last May and far exceeding expectations.

The strong employment data indirectly proves the momentum of economic growth in the United States, significantly reducing expectations for interest rate cuts.

Will the Federal Reserve cut interest rates this year? Why does the Fed's attitude keep changing? With interest rates remaining high, is the United States trying to continue harvesting China?

Strong employment data, no rate cuts this year?

Undoubtedly, the most concerning issue for the global market this year is when the Federal Reserve will start the interest rate cut cycle.

Previously, some speculated it would be in March, but that hope was dashed. A large number of people then believed it would be in June or July, with others predicting September.

However, judging from the latest U.S. employment data, it's not certain that there won't be any interest rate cuts this year.

The U.S. non-farm employment in March surged by 303,000, not only far exceeding the expected median of 214,000 but also surpassing all forecasts given by analysts.This implies that the U.S. economy is far more robust than we imagined, and the prospect of a rate cut is increasingly distant. Since its establishment, the Federal Reserve has been dedicated to maintaining a balance between inflation and employment. Now that employment data has significantly exceeded expectations, it suggests that the Fed's focus will shift towards reducing inflation. The primary method of lowering inflation through monetary policy is by raising interest rates. However, with the U.S. federal funds rate already at a high of 5.25% to 5.50%, further rate hikes are clearly unrealistic. Therefore, the most likely scenario is to maintain the current high interest rates and patiently wait for inflation data to continue to decline. As a result, market confidence in a Fed rate cut is continuously diminishing. The number of rate cuts expected within the year stands at three, and this expectation is gradually decreasing. According to the CME Group's observation tool, the probability of the Fed's first rate cut in June has already dropped to around 50%, down from 63% previously. In addition, several high-ranking Fed officials, including Chairman Powell, have begun to speak out frequently. Powell emphasized that the labor market is "strong but returning to balance," while other officials directly stated that there is no rush to cut rates at present. At this point, it seems almost certain that the Fed will delay rate cuts, which would be a significant bearish factor for the global economy. Is the real intention behind the Fed's actions not about the economy, but an attempt to capitalize on China? In the past, the Fed has announced rate cuts on multiple occasions, partly because inflation issues have eased, although the 2% target has not been met, there has been significant improvement. Another reason was concern that rate hikes would affect employment and lead to an economic recession.But now that the employment data has been released, it has exceeded expectations and is extremely hot, so the urgency for interest rate cuts is no longer imminent, and the Federal Reserve has shifted its focus to inflation.

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According to past experiences in the United States, as long as high interest rates are maintained, it would naturally lead to the collapse of other economies, allowing the United States to wield the dollar sickle and complete a significant wave of harvesting.

However, this time, despite the unprecedented strength of the interest rate hikes, the currencies of some developing countries have already collapsed, becoming completely at the mercy of the United States, but this is still far from enough for the U.S.

The purpose of the U.S. maintaining high interest rates, in addition to addressing domestic inflation issues, is also more than just that; it continues to attempt to harvest China.

It should be noted that although the continuous interest rate hikes in the U.S. have indeed had some impact on China, and the yuan exchange rate has fluctuated, it is still far from collapsing.

So the current situation has become that the U.S. employment data is good, and it seems that maintaining high interest rates can hold on for a while longer. If it can truly expand the battle results and complete the harvesting of China, that would naturally be even better.

In other words, what follows is a competition of resilience and endurance between the two sides, and it depends on who will be the first to give in.

Caught in a dilemma

In the past, when the dollar hegemony was at its peak, the dollar tide harvesting policy was invincible, and the U.S. relied on this move to reap a lot of profits around the world.

But this time, when the Federal Reserve raised interest rates again to prepare for harvesting, it found that the previous regular phenomena had completely failed.Interest rate hikes have continued to the present day, and aside from the collapses of developing countries like Sri Lanka and Argentina, no "big fish" has been caught yet.

Even though Sri Lanka has collapsed, it ended up being outmaneuvered by China, which seized a plethora of high-value assets such as ports and infrastructure.

So, despite the current impressive employment data, the Federal Reserve is actually in a dilemma:

If it continues to maintain high interest rates and delays the start of a rate-cutting cycle, the U.S. debt scale will continue to soar, and the fiscal deficit issue will intensify, with the interest alone on trillions of dollars annually being enough to give the United States a hard time.

Moreover, during this round of interest rate hikes, a number of top U.S. banks have already fallen, and the remaining ones are basically all on the brink; if high interest rates continue, how long these banks can hold on is an unknown, and it is difficult to say whether a systemic financial crisis will occur.

But if it starts to cut rates, the current goals are far from being achieved, and it is impossible to complete the harvest of the ideal targets, which is almost equivalent to a failure at the last minute.

In addition, the inflation that is currently under temporary control is also a problem; stopping the medication before the chemotherapy is over, if the indicators rebound, it is likely that there will be no way to turn things around.

If the script from the 1970s is replayed and a stagflation crisis occurs, it would have a catastrophic impact on the U.S. economy, and the Federal Reserve would once again become the "sinner" in American history, which it absolutely cannot accept.

At present, the Federal Reserve is facing a difficult choice, which is why it keeps postponing the timing of rate cuts, appearing indecisive and hesitant, and this itself is a kind of game between major powers.

In conclusion:The expansion of the manufacturing industry and the surge in non-agricultural employment numbers seem to highlight the strong vitality of the U.S. economy. Whether the Federal Reserve will cut interest rates this year remains undetermined. However, no matter what, the resilience of China's economy is beyond imagination, and attempting to reap the last benefits from China will ultimately prove to be a fruitless endeavor.