China Galaxy Macro: Strong non-farm payrolls does not mean the Fed will raise interest rates this year.

The Macro Research Report of China Galaxy Securities believes that the strength of non-farm payrolls does not necessarily mean that the Federal Reserve will raise interest rates within this year. Overall, the May labor market data shows that employment conditions are still better than market expectations, and the Federal Reserve lacks short-term reasons and data to support an interest rate cut; however, the structure still shows that the labor market does not have a clear risk of acceleration, nor will it spiral up inflation, there is no need to overprice the risk of interest rate hikes this year. Although non-farm data has been relatively strong since March, it has only raised the threshold for the Federal Reserve to cut interest rates within the year in the short term, and it will not lead to pressure for an interest rate hike. Overall, market concerns about interest rate hikes have become the main theme of trading. Although China Galaxy Securities tends to believe that the market has overpriced the risk of interest rate hikes, short-term lagging economic data does not refute the expectation of interest rate hikes, and the Federal Reserve can only maintain a "data-dependent" stance. Currently, the market faces a period of correction risk after extreme pricing in AI, liquidity expectations are expected to recover within the year, but this will require waiting.