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the shadow of the crash in early august looms again, and this time it may be worse!

this week, a series of us employment and economic data continued to be weak: adp new employment fell to the lowest level in more than three years, and the manufacturing pmi was cold. last night (september 6), non-farm data fell short of expectations, adding evidence of a cooling labor market, but the unemployment rate fell from 4.3% to 4.2%, which was in line with expectations., it doesn't seem to be too bad.

but the market panicked first. in addition to the almost complete annihilation of u.s. bonds: the stock market plummeted, the u.s. dollar plunged, bitcoin plummeted, crude oil plummeted, and even the safe-haven asset gold fell.

as panic spread, futures trading betting on interest rate cuts exploded. yesterday, the trading volume of the second tier of u.s. federal funds futures hit a record high, and the trading volume in october also brokesilicon valley bankthe collapse rocked financial markets to record levels that month.

zerohedge commented that this time may be worse than august:

putting last night's plunge in context with this week's, it could be argued that this one was even worse than the one on august 5 (black monday), as that was only one day of intense pain, and by the end of that week, the stock market had rebounded significantly.this time, however, the pain has only just begun, and what started badly at the start of the week has ended up being much worse, with a massive reckoning…

concerns about a recession have intensified again, with a bloomberg article commenting that the latest plunge is exactly the same as the concerns about the first plunge (in early august) -the economy could suddenly and quickly stall, and the fed would be unable to save it without emergency action.

us stocks and risk assets plunged, and futures trading betting on rate cuts exploded and trading volume hit a record

"black monday" took place on august 5, and the global financial market collapsed. the nikkei 225 plummeted by more than 12%, and the us nasdaq 100 index futures fell by more than 5%. the expectation of a "hard landing" of the economy has risen sharply, and pessimism has been infinitely magnified. but in just two weeks, the us stock market has recovered from，。

the august crash came and went quickly. however, in september, a series of weak employment data caused the us stock market to continue to fall. this week, the s&p 500 index has fallen for four consecutive days, and credit spreads have widened at the fastest rate since early august. on the "non-farm day", the us stock market started to plummet, and almost all of it was wiped out along with other risky assets.

overnight, the three major u.s. stock indexes fell across the board: the s&p 500 closed down 1.73%, and fell 4.25% this week, the largest weekly drop since march 2023. the dow jones industrial average, which is closely related to the economic cycle, fell 1%, and fell nearly 3% this week; the nasdaq, which is dominated by technology stocks, fell 2.6%, and fell 5.8% this week, entering a technical consolidation.

cryptocurrencies fell sharply to a seven-month low. bitcoin, the largest cryptocurrency by market value, fell 5.75% to $52,980.00 in late trading, and fell 10.51% this week.

the dollar weakened and the yen rose.

brent crude oil closed at its lowest level in nearly three years since the end of 2021 and fell nearly 10% for the week.

gold was not immune, briefly hitting a record high after the jobs data was released, then falling to an intraday low.

not onlynvidia, the “seven sisters” of u.s. stocks have now returned to the levels after the plunge on august 5.

only bonds performed relatively strongly, with the 10-year u.s. treasury yield first falling sharply, then soaring, then falling again, and finally closing near the intraday high.

futures trading betting on rate cuts exploded overnight as panic spread.

data compiled by bloomberg shows that as of 13:00 eastern time on friday, september 6, and 1:00 a.m. beijing time on saturday,the second-tier contract of the u.s. federal funds futures, which is usually the most actively traded, reached a trading volume of 900,000 contracts, setting a record for the highest single-day trading volume of any contract since this trading product appeared in 1988.trading volume for the october contract also hit a new high, breaking the all-time high set in march 2023, the same month when the collapse of silicon valley bank shocked financial markets.

"the economy could stall suddenly and quickly!" stocks recognize recession risk, join bonds

“times are getting tougher for wall street investors who are clinging to a bullish outlook for the economy.”

a bloomberg article commented that in early august, early signs of a weakening labor market caused bond yields and stocks to plummet in a volatility storm that came and went quickly.the latest plunge reflects the same set of concerns that led to the first one - that the economy could (suddenly) stall quickly and the fed would be unable to save it without urgently adopting policy remedies.

currently, the bond and commodity market trends predicted concerns about a recession earlier than risky assets such as stocks, and began to price in faster interest rate cuts. in bloomberg's view, bond investors are often called "smart money" because they have the ability to foresee changes in the direction of the economy. the two-year u.s. treasury yield fell to its lowest level since 2022. similarly, commodities also issued warnings of economic concerns, with oil, copper and other commodities falling significantly.

jpmorgan chaseas of wednesday, stock and investment-grade credit markets were pricing in just a 9% chance of a recession, while commodity and bond markets were pricing in higher probabilities of 62% and 70%, respectively, analysts’ models showed.

risk assets such as the stock market did not realize the crisis until this crash. the drastic change in the market "awakened" risk asset traders to start worrying about the economy, and the selling of risk assets intensified.

“investors may be waking up to recession risk now, but they’ve already hit the snooze button 10 times before this,” said michael o’rourke, chief market strategist at jonestrading in new york. “the environment is only getting worse, both in terms of economic data and subsequent earnings reports.”

priya misra, portfolio manager at jpmorgan asset management, said: "i don't think any market has really priced in a reasonable probability of recession, but all the data show that the risk of recession is increasing. although the fed is still debating whether to cut interest rates by 25 basis points or 50 basis points in september,if a recession does come, all markets will be affected. it will take time for rate cuts to filter through the economy.”