The non-farm data strengthens expectations for a one-time 50 basis point rate cut by the Federal Reserve and the European Central Bank

News on August 2nd, the U.S. non-farm employment data was weaker than expected, which is enough to prompt a larger interest rate cut. The market currently predicts that there is a 20% chance of the European Central Bank cutting interest rates by 50 basis points at its September meeting, and a 70% chance of cutting interest rates by 25 basis points in October. Current swap contracts show that the market expects the Federal Reserve to cut interest rates multiple times by 50 basis points: there's a possibility of a rate cut in September (75%), November (60%), and December (15-20%).