Core Viewpoint - The Federal Reserve's decision to cut interest rates by 25 basis points is seen as a preventive measure to support the economy, but it does not eliminate the risk of recession in the U.S. economy [5][9][10]. Economic Indicators - The U.S. labor market shows signs of weakness, with only 73,000 jobs added in July 2025, below the expected 110,000, and the unemployment rate rising to 4.2% [11]. - In August 2025, non-farm employment increased by only 22,000, with the unemployment rate reaching 4.3%, the highest in nearly four years [11]. - The U.S. Bureau of Labor Statistics revised employment data downward, indicating a reduction of 911,000 jobs, revealing a more fragile labor market than previously thought [11]. Manufacturing Sector - The New York Fed's manufacturing index fell to -8.7 in September 2025, significantly below the forecast of 5.0, indicating a downturn in the manufacturing sector [12]. Trade Policies - Trade protectionism, particularly the tariffs imposed by the Trump administration, is negatively impacting the U.S. economy by increasing costs for consumers and businesses, leading to reduced investment and consumer spending [13][14]. - The tariffs are expected to result in significant job losses and income reductions for American households, with estimates suggesting a potential recession probability increase from 25% to 40% [14]. Market Reactions - Following the Fed's rate cut, various asset classes reacted with volatility, indicating a lack of confidence in the Fed's optimistic forecasts [9][10]. - The demand for safe-haven assets like gold and U.S. Treasuries is expected to rise as investors seek refuge from potential economic downturns [17]. Long-term Implications - The U.S. government's rising debt burden, projected to exceed $37 trillion, poses a risk to the long-term stability of U.S. Treasuries, potentially diminishing their safe-haven status [18]. - The dollar may experience a short-term strengthening due to safe-haven flows, but long-term trends suggest a weakening of the dollar as global trust in U.S. fiscal management declines [19]. Summary of Asset Movements - In the event of a recession or heightened recession expectations, investors typically shift from risk assets to safe-haven assets, leading to a temporary increase in demand for U.S. Treasuries and the dollar, while long-term concerns about debt and creditworthiness may undermine their value [20].