Why did the market respond to bad news with growth - and what is behind it?
08.06.2025
Bad News = Growth? How the Market Surprised Again Amid Weak Macro Statistics
📊 Today, weak data on the US labor market was released – the number of new jobs was lower than expected, and the unemployment rate rose by 0.3%. But instead of falling, the markets went up. Nasdaq +1.8%, S&P500 +0.9%.
📌 1. What happened?
Non-Farm Payrolls: +105K vs. +180K expected
Unemployment rate: 4.3% (above 4% for the first time in 2 years)
10-year US Treasury yields down 14 bps
Gold: up to $2,450 (new high)
S&P 500: updated local highs
📈 2. Why is the market growing on bad data?
Weak data → the market is pricing in a softer Fed policy
The likelihood of a rate cut in the next 2 meetings is increasing
The pressure on the debt market is decreasing
Tech stocks are winning: cheap money is returning to growth
🧠 3. How is this causing investors to react?
Rotation into risk: growth of high-beta papers, small cap
Withdrawal from short-term bonds
Interest in ETFs for volatility (growth of VIX call options)
⚠️ 4. What is important to consider:
The market is overheated by expectations: the bet on the Fed’s “turn” may be premature
The foundation is weak: corporate profits without drivers
A short squeeze is possible amid increased liquidity
🔹 Conclusion
The market does not operate according to the logic of “good news = growth”, but according to the logic of “what does this mean for rates”.
The weakness of the economy now gives hope for a quick reduction in rates. But if the economy continues to deteriorate, this will not be a reason for growth, but a reason for panic.
🔹 Recommendations
📌 For traders: be careful with longs on positive candles – the pullback can be sharp
📌 For investors: maintain diversification, avoid emotions
📌 For those interested: keep an eye on the CPI (coming out in 10 days) – it can change the rules of the game