SignalPlus Macro Analysis Special Edition: Seasonal Caution

The overall market was quiet last week, with the U.S. market almost ignoring two highly anticipated events --- --- Nvidia's earnings report and Friday's PCE data. Although U.S. stocks saw a slight rise early in the week amid low volatility, prices ultimately pulled back before the long weekend due to weakness in tech stocks (Nvidia and Dell's earnings fell short of expectations).

In terms of data, July's core PCE inflation rose 0.27% month-on-month and 2.9% year-on-year, in line with expectations, but the "super core" service inflation unexpectedly surged to 0.39%. The market was willing to overlook a one-time increase in the financial services sector, keeping Treasury yields near recent lows. This week's focus will be on Friday's Non-Farm Payroll (NFP) report, with the market expecting a total employment increase of about 45,000 (60,000 in the private sector) and an unemployment rate of 4.3%. Given the weak hiring demand, the trend of slowing job growth is expected to continue, with about 50,000 new jobs per month reflecting the realities of economic slowdown and reduced immigration. The Federal Reserve fully pivoted to a dovish stance after the Jackson Hole meeting, leading to a significant rise in precious metals, with gold nearing $4,000 and silver breaking above $40/ounce for the first time since 2011. Additionally, due to ongoing geopolitical pressures and sticky inflation, the amount of gold held by foreign central banks has surpassed U.S. Treasuries for the first time since 1996, and this trend is expected to continue. In the cryptocurrency space, despite strong gold performance, cryptocurrency prices fell last week, and the market bubble seems to have slightly deflated, with the DAT premium overall retreating to long-term lows. New capital inflows appear to have peaked, leading to a rotation of funds, with Solana being the only cryptocurrency to rise this week, as SOL became the latest destination for the DAT craze, and the total value locked (TVL) on-chain also saw a significant rebound. Looking ahead, we expect September to be a month of increased volatility for risk assets overall. Historically, September's seasonal performance has not been friendly to stocks (down), 10-year Treasury yields (up), and Bitcoin (down) over the past decade. Meanwhile, volatility premiums are at cyclical lows, and risk leverage is accumulating. Given that the Federal Reserve has "front-loaded" its easing intentions, what cards are left to play if risk assets decline in September?

It is currently too early to make a judgment, but as the seasonally tricky months of September to November approach, we advise maintaining caution. Wishing friends successful trading and good luck!