Recently, the unusual performance of U.S. economic data has triggered significant fluctuations in the financial markets. The latest figures for initial jobless claims and the core Personal Consumption Expenditures (PCE) price index were far from market expectations, and this unexpected situation has led to a fundamental shift in market expectations regarding interest rate cuts by the Federal Reserve.

These data reveal the complex situation of the current U.S. economy. First, the number of initial unemployment claims exceeded expectations, indicating that the job market remains strong and has not shown obvious signs of cooling. At the same time, the core PCE price index remains high at 2.8%, reflecting that inflationary pressures still exist. The performance of these two indicators is inconsistent with the market's prior general expectations of an economic slowdown and a decline in inflation.

The unexpected performance of data has had a profound impact on the financial markets. Investors have begun to reassess the direction of the Federal Reserve's monetary policy, realizing that the possibility of a rate cut in September is now very low. The awareness that a 'higher for longer' interest rate environment may persist for a longer time has triggered a significant change in market sentiment.

With the change in interest rate cut expectations, the flow of funds has also shown a significant shift. The strengthening of the US dollar has attracted more capital into dollar-denominated assets, while placing pressure on risk assets facing capital outflows. The cryptocurrency market is a typical example, showing a clear phenomenon of net capital outflow. If the US dollar continues to strengthen, high-risk assets may face an even greater risk of capital loss.

In addition, the data showing a personal spending month-on-month rate of 0% has raised market concerns about insufficient endogenous economic momentum. The weak performance of the consumption market stands in stark contrast to the high labor cost index, and this contradictory economic indicator has increased market worries about potential stagflation risks.

In the face of this complex economic situation, the attitude of institutional investors has become more cautious. The uncertainty regarding the economic outlook has led many investment institutions to adopt a wait-and-see approach, unwilling to make investment decisions lightly, which further exacerbates the downward pressure on asset prices.

Overall, the latest economic data has shattered the market's existing expectations, revealing the multiple challenges facing the U.S. economy. In this context, investors need to closely monitor subsequent economic indicators and policy trends to adapt to the potential new market environment.