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(Original title: Global assets staged a battle royale! Has the last domino of the US economy fallen?)

The latest non-farm report became the trigger for a new round of sell-off.

Weak employment data heightened concernsUSAConcerns about economic slowdown and recession loomed as European and American stock markets opened lower and closed lower on Friday.AmazonThe negative financial reports of Apple and Intel have once again put the prospects of the artificial intelligence industry to the test. The continued turbulence of blue-chip stocks has intensified market panic and capital flows, and risk aversion sentiment remains high.

Does non-farm payrolls signal the countdown to recession?

The latest report from the U.S. Department of Labor said that the United States added 114,000 jobs in July, a new low for the year. At the same time, the wage growth rate fell to 3.6%, a new low in the past three years.

As cracks appear in the labor market, the last piece of the U.S. economyDominoesIt may be falling. Before this, the US job market continued to be hot, even when economic data fluctuated. However, starting from the second quarter, the US non-farm report showed a clear cooling trend, which gradually coincided with private surveys, and the unemployment rate continued to rise.

It is worth mentioning that as the unemployment rate rose from 4.1% to 4.3%, this has triggered the "Sam's Rule" that indicates a recession. Sam's Rule means that when the three-month average of the unemployment rate is 0.5 percentage points higher than the 12-month low, it usually means that the economy is already in recession. This rule has been confirmed in all 11 US recessions since 1950.

In fact, the U.S. economy seems to be facing huge headwinds at the beginning of the second half of the year. Against the backdrop of the sluggish manufacturing index of the local Federal Reserve, the July ISM manufacturing index released this week fell to an eight-month low of 46.8%, indicating that the manufacturing industry across the United States is shrinking further.

The downturn in the manufacturing industry may be caused by the downturn in consumer demand and confidence. The latest consumer confidence index released by the University of Michigan remains at a low level this year.FedThe Beige Book also shows that contacts believe that the rest of the yearGDPGrowth will be tested.

The Federal Reserve kept interest rates unchanged at its rate meeting this week, butRate cutsThe door was opened. Fed Chairman Powell also talked about the labor market at the time, saying that he would be alert to possible signs of large fluctuations. Therefore, the latest data will undoubtedly sound the alarm for the FOMC.Federal funds rate futures show that the probability of a 50 basis point rate cut in September has risen to 80%.The room for interest rate cuts throughout the year reaches more than 110 basis points.

Boris Schlossberg, macro strategist at BK Asset Management, an asset management institution, said in an interview with Yicai Global:The question now may not be whether the Fed will cut interest rates in September, but whether it will cut by more than 25 basis points.What we can see is that discussions about recession and criticism of the Fed will grow louder.

Wall Street institutions have quickly adjusted their judgment on the Federal Reserve's monetary policy.Goldman Sachs now expects the Fed to cut interest rates three times this year.If the August non-farm payrolls report is also weak, a 50 basis point rate cut could be in the cards.

Citigroup believes the Fed will cut rates by 50 basis points at its September and November meetings, and by 25 basis points at its December meeting.The bank had previously expected the Fed to cut interest rates by 25 basis points at each of the three meetings. JPMorgan economist Michael Feroli also predicted a 50 basis point cut in September and November, but he wrote that Fed Chairman Powell may not want to create uncertainty in the market.

Risk assetsBattle Royale

A new round of sell-offs in U.S. stocks began on Thursday. Highly valued technology stocks have become the hardest hit, and funds have flocked to defensive sectors. Angelo Kourkafas, senior investment strategist at Edward Jones, said: "People have always believed that interest rate cuts are only because inflation is close to the target and everything else remains quite solid. But now there are some cracks."

Following Tesla and Google last week, Intel and Amazon have become another victim of negative financial reports.Intel's stock price plunged nearly a quarter on Friday as the company's second-quarter performance fell far short of market expectations and its third-quarter guidance disappointed the market. The company also announced a major layoff plan of more than 15% (about 15,000 employees) this year.

Amazon fell more than 10% during the session.In addition to slowing growth in its main business of online sales, Amazon, like other large technology companies, is increasing capital expenditures to invest in artificial intelligence infrastructure and development, spending about $16.5 billion in the second quarter. Google's parent company Alphabet and Microsoft both said last month that spending will remain high throughout the year to support the development of expensive artificial intelligence software and services. Investors see this as a signal that the payback of this hot technology may take longer than initially expected.

As the earnings of technology giants were released one after another, high expectations dampened investor enthusiasm. The broader market also showed signs of unease. The Chicago Board Options Exchange Volatility Index (VIX) rose by more than 40% in late trading.

Meanwhile, investors showed preference for sectors such as utilities and health care, which are popular choices during times of economic uncertainty.The health-care sector has gained 4% over the past month, while utilities have gained more than 9%. In contrast, the Philadelphia Semiconductor Index has fallen 11% over the same period, with popular companies such as Nvidia and Broadcom falling sharply.

In the foreign exchange market, the Japanese yen rose 1.7% against the US dollar, approaching the 146 mark. The cumulative appreciation this week exceeded 6%. The flow of safe-haven funds further exacerbated the rise of the yen.At the same time, the Swiss franc was also boosted by risk aversion, with the Swiss franc/dollar rising to 0.856, a nearly seven-month high. In addition, the gains in the euro/dollar and the renminbi/dollar also exceeded the decline in the dollar index that day.

In terms of commodities, gold surged to $2,510 per ounce after the release of non-farm data, setting a new historical high.At the same time, recession fears hit crude oil again, with international oil prices falling more than 3% in late trading, completely giving up the risk premium brought about by concerns about escalating tensions in the Middle East earlier this week. Phil Flynn, senior market analyst at Price Futures Group, believes that demand concerns have regained dominance after a series of disappointing US data triggered a sell-off in crude oil and other assets including stocks, as people worry that the world's largest economy may be sliding into recession.