At 6:00, the whole world fell silent

Source: Wall Street Intelligence Circle

The global markets opened “silently” on Monday:

- Gold and the US Dollar Index both opened slightly higher;

- US stock futures rose at the open, quickly turned lower, and then recovered the losses;

- Oil prices continued to fall on inertia at the open;

- The 10-year US Treasury yield edged up to 4.487.

Monday is most likely to be a “recalibration day.” The market needs to decide again: Does a weak non-farm payroll mean a more dovish Fed, or a more fragile US economy?

First, gold and the US dollar moving higher together indicate that the market is not trading just a single narrative. Especially for the latter, it suggests that dollar bears are cautious and the market is unwilling to fully confirm that the Fed has turned dovish.

Second, for US stocks, it’s important to observe market style today, not just index moves. If tonight the Dow remains relatively strong, while the Nasdaq is weaker and defensive sectors outperform, it marks the market’s official transition from “trading liquidity” to “trading earnings quality.”

Third, today’s market core is not direction, but divergence:

USD: Waiting for the next set of data, unwilling to turn weak completely;

US stocks: Shifting focus from rate pause to earnings concerns;

Oil: Demand fears outweigh dollar weakness;

US Treasuries: Inflation and fiscal pressures remain, yields resist falling.

Fourth, the decisive event tonight is the release of the US ISM Services PMI. If ISM Services remains strong, the market may view weak non-farm payrolls as a local disturbance and the dollar might rebound. If ISM Services shows notable weakness, the market may see the jobs slowdown as more than a fluke, the dollar would continue to be under pressure, and gold would benefit. Of course, what truly matters is not whether tonight’s ISM number is good or bad, but how the market reacts to “bad news.”

The real market test this week isn’t today, but Thursday and Friday.