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The highly likely interest-rate cut is being driven by elevated labor concerns following weaker NFP data and sharp revisions that shocked markets. While a cut may provide short-term relief and fuel an equity rally, it also risks compounding already elevated inflation pressures. Such a move could prove to be a policy error, leading to dollar depreciation and higher inflation over the medium to long term, potentially setting the stage for a bearish cycle. Currently, the CME FedWatch tool shows an 88.2% probability of a rate cut in September.

A key focus will be the Non-Farm Payrolls Annual Revision, previously set at -818K. If the latest revision pushes this figure higher, market sentiment could be pressured, offsetting the dovish boost from rate-cut expectations. Conversely, a more favorable revision could surprise to the upside and further shock the market.

Macro conditions remain mixed: elevated debt levels and tight credit spreads continue to support risk assets under the dovish outlook, but persistent inflation risks suggest commodities could outperform if growth holds. Should growth falter, stagflation risk rises.

From a technical perspective, the E-mini S&P 500 is trading above both the monthly and quarterly developing value areas, while weekly volume structure points higher with a key level around 6481 setting the broader bias. On the intraday level, we have an inside day, and traders should watch the extremes for absorption signals that may trigger mean-reversion trades. The POC at 6503 serves as a pivotal supportive level for bias confirmation.

In summary: short-term momentum favors upside driven by the anticipated rate cut, but long-term risks from inflation and currency depreciation remain significant. The NFP annual revision will be crucial in determining whether today’s imbalanced momentum resolves with continuation or rotation.

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