Group 1 - The core viewpoint of the article highlights that the U.S. non-farm payroll data for August significantly underperformed expectations, with only 22,000 jobs added compared to the forecast of 75,000, and the unemployment rate rising to a new high of 4.3% [1][6][8] - The employment situation across most sectors has deteriorated, particularly in cyclical industries, which saw a reduction of 48,000 jobs, a decline that expanded by 26,000 from the previous month [1][6][10] - The private sector added only 38,000 jobs in August, which is also below expectations, while the government sector saw a decrease of 16,000 jobs [1][6][10] Group 2 - The labor market is currently characterized by a fragile balance of weak supply and demand, with the unemployment rate expected to continue rising slightly [2][14][23] - The credibility of the August non-farm data is questioned due to a low response rate of 56.7%, the lowest in recent years, and historical trends suggest that these figures may be revised upwards in subsequent months [2][14][20] - Leading indicators, such as small business hiring plans and unemployment claims, suggest that the labor market still possesses some resilience, indicating that a significant deterioration is not imminent [2][14][23] Group 3 - Following the release of the non-farm data, market sentiment shifted from "rate cut trading" to "recession trading," with expectations for a 50 basis point rate cut in September rising to 11% [3][6][14] - The market anticipates two rate cuts by the end of the year, although the likelihood of three cuts hinges on the unemployment rate reaching 4.6% or higher, which remains a low probability scenario [3][6][14] - The current equilibrium level of job additions in the U.S. labor market is projected to fall to between 30,000 and 80,000 jobs per month, with the unemployment rate likely to rise if job additions remain at the low level of 22,000 [2][23][32]

Report Summary 1. Report Industry Investment Rating No information provided. 2. Core Viewpoints - The panic caused by recent tariffs has led investors to de - leverage and chase cash, resulting in the selling of both safe and risky assets. The 10Y US Treasury yield has risen by up to 60BP from the low of 3.9% on April 7th, approaching 4.5%, and the 10Y breakeven inflation rate has decreased, indicating that the yield increase is due to institutional de - leveraging rather than inflation trading. The selling of US Treasuries may be due to investors selling to replenish margins and hedge funds closing basis trades in high - volatility situations [3]. - The current US Treasury liquidity shock is similar to that in March 2020 but less severe. So far, the shock has not spread to the money market, with stable trading volume in the federal funds market and stable bill financing costs. Off - shore US dollar liquidity has tightened slightly [3]. - The current liquidity shock may not have reached the level requiring Fed intervention. If tariff negotiations progress and the US stock market stabilizes, the selling pressure on US Treasuries may ease, and the liquidity shock may subside spontaneously. However, if external policy shocks intensify market panic, the shock could spread to the money market, and the Fed may provide liquidity support through tools despite a low probability of emergency rate cuts [3]. - In an environment of high policy uncertainty, investors are advised to control their positions in the short term [3]. 3. Summary by Related Information Current US Treasury Market Situation - The 10Y US Treasury yield has risen significantly due to de - leveraging, and the 10Y breakeven inflation rate has decreased, showing non - inflation - driven yield increase [3]. - Credit spreads have widened significantly, while bill financing spreads have remained low. Off - shore US dollar liquidity has tightened marginally, and the federal funds market trading volume has remained stable [3][11][15]. Comparison with 2020 March Situation - The current US Treasury liquidity shock is similar to that in March 2020 but less severe [3]. - In March 2020, the shock lasted nearly ten days, leading to Fed emergency rate cuts and QE. There were a series of events such as stock market circuit - breakers, increased repo投放, and the establishment of multiple Fed facilities [18].