SignalPlus Macro Analysis Special Edition: Up Only

The U.S. market resumed trading after the long weekend on July 4th and quickly announced a slight concession regarding the upcoming tariff deadline. Commerce Secretary Lutnick stated that tariffs on various countries would be postponed until August 1st, effectively granting trade partners a final period for negotiations to reach an agreement at the last moment.

Meanwhile, non-farm payroll data once again showed unexpectedly strong performance (at least on the surface), and risk markets remained robust last week.

• Non-farm payrolls increased by 147,000, far exceeding the expected 106,000, and the data for the previous two months was revised up by 16,000 (previously -95,000).

• The unemployment rate was 4.12%, lower than the expected 4.3% and the previous value of 4.2%.

• Average hourly wages grew by 0.2% month-on-month (3.7% year-on-year), slightly below the expected 0.3% (3.8%) and the previous value of 0.4% (3.8%).

Despite economists pointing out that the job growth was mainly concentrated in the service industries such as dining and hospitality, leading to an unbalanced employment structure, the market still tended to interpret the surface data optimistically, maintaining the narrative of an ideal economic outlook.

In terms of market reaction, the strong employment data reduced the expectation of interest rate cuts in 2025 by about 15 basis points, with the possibility of a rate cut at the July FOMC meeting remaining at around 5%, down from about 24% a week earlier. The terminal interest rate forecast for the end of 2025 is around 3.8% (a 50 basis point reduction from the current 4.3%), while the rate for the end of 2026 is estimated to be around 3.15% (an 85 basis point reduction).

The dollar rebounded against major currencies (the dollar against the yen rose to about 145), while U.S. stocks closed flat after reaching new highs last week. BTC also approached recent highs again (over 109,000) driven by stable capital inflows, and the ETH ETF recorded the largest single-day capital inflow in the past quarter. Fundstrat's Tom Lee recently became a topic of discussion, as his ETH asset reserve operation entity BMNR announced it raised $250 million for a large purchase of ETH, causing its stock price to soar over 30 times.

Fortunately, stocks are "regulated" securities; otherwise, investors might mistakenly think this is some highly volatile altcoin. As always, TradFi always seems to enjoy the most fun.

Currently, the correlation between cryptocurrencies and stocks remains close to cyclical highs, and it is expected that BTC will continue to follow the movements of the SPX index during this seemingly calm summer period.

At the same time, setting aside tariff threats, geopolitical tensions, and policy uncertainties, the U.S. has indeed made some significant progress over the past month. Specifically, the U.S. government has:

• Passed a major tax reform bill, bringing significant fiscal investment and greatly reducing the risk of economic recession.

• NATO and other trade allies have agreed to increase defense spending as a global driving force.

• The U.S. economy continues to grow steadily, and corporate profits have successfully climbed amidst concerns.

• Although previous worries about uncontrolled fiscal deficits had intensified, yields in the fixed income market have stabilized.

• The worst periods of geopolitical conflict seem to have passed.

In this context, the SPX index reached a historic high following the passage of the tax reform bill and the release of non-farm payroll data, gaining further momentum this morning due to the latest tariff delay news. Last week, 36 stocks in the SPX component closed at 52-week highs, and the sentiment in the U.S. stock market remained in the "extremely optimistic" range.

Seasonal trends typically perform well during the summer months, with July historically being one of the strongest months. Don't miss out on good opportunities!

Finally, this week marks the beginning of earnings season, with many companies set to announce profits. It is expected that tariff-related disruptions will be milder than in the second quarter, and the market anticipates an overall positive financial outlook.

This summer looks set to be hot and calm. Wishing everyone successful operations and enjoy this wave of market trends!