On October 8th, U.S. Treasury bonds bid farewell to their downward trend and began to surge, with short-term debt directly becoming the "pioneer" of the bond market's gains, indicating that the market is genuinely starting to worry about the resurgence of U.S. inflation.

Many analysts have begun to exert their influence, believing that the Federal Reserve's previous aggressive interest rate cut strategy was a mistake. The current economic resilience remains strong, but inflation can easily rise in the interest rate cut channel. Coupled with the recent tension in the Middle East, crude oil prices have begun to rise. Perhaps exiting the interest rate cut channel is the best solution.

At this time, the Federal Reserve Chairman also began to take a hawkish stance, believing that the pace of interest rate cuts should slow down, and future monetary policy still needs to be decided based on data.

Why have they started saying they don't want to cut interest rates again? Was the previous inflation really under control?

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Here, we still need to look at their economic barometer - non-farm data. Although they revised the data for July and August, and the September data also has a lot of water, we can see the most critical point, which is the government's debt to protect the data.

In the report released this time, the number of new jobs in ordinary private enterprises is only 133,000, while the adjusted number of new government employees is 785,000, which is the largest increase in U.S. government employee data in four years.

Borrowing to protect employment can at least boost market confidence. At least many economists are very shocked because their previous market forecast for September's new data was around 150,000, but no one expected the Department of Labor to announce data of around 250,000 on October 4th.

Under such data, the labor market shows a thriving scene. In the optimistic atmosphere expressed by the market, the Federal Reserve stated that it would continue to fight inflation.

Here, everyone may start to wonder, isn't the economic data very good? How can inflation still come?

Because a "black swan" event occurred. From the end of September to now, there have been large-scale hurricane disasters in various states in the southeastern United States, which have now led to many enterprises' factories shutting down, and the number of people applying for unemployment benefits has begun to soar.Although many institutions have indicated that the impact on employment will be minimal, with an estimated loss of 100,000 jobs, the domestic prices are expected to rise. For instance, Florida, which is the largest producer of citrus in the United States and has been affected by hurricanes, will see its fruit market prices impacted. The next three states most affected are major contributors to the GDP, which will have a certain negative impact on this year's GDP figures.

Both disaster relief funding and hiring more government employees are necessary expenses. According to the data released on October 9th, which covers the period up to September, the current federal revenue stands at $4.92 trillion, while the expenditure is $6.75 trillion, resulting in a budget deficit of $1.83 trillion.

Despite the start of a rate-cutting cycle in September this year, the pressure to repay the national debt sold during the previous long period of interest rate hikes is significant. Regardless of which candidate moves into the White House next, it is highly likely that they will continue the path of "issuing new debt to repay old debt."

Faced with such a dilemma, the United States may continuously increase its development scale to maintain economic growth. However, the U.S. debt-to-GDP ratio has already exceeded 120%, and its debt capacity is becoming increasingly lower, with a worsening normality. Consequently, concerns in the bond market are beginning to rise, demanding higher risk compensation for U.S. debt. This is why the bond market has started to decline.

This is also why many analysts are now criticizing the previous interest rate reduction policy. They believe that reducing interest rates by 50 basis points is undermining market confidence and triggering panic about a major economic recession.

At least there are still many who believe that inflation has not actually decreased because it is a structural economic issue that cannot be resolved by monetary policy alone.

Since the Biden administration took office, the so-called "Bidenomics" has largely continued Trump's protectionist policies, even more aggressively in terms of imposing tariffs.

In this presidential election, Harris has continuously accused Trump of being the "chief culprit" behind high inflation because he recklessly initiated a tariff war, leading to a continuous downgrade in consumption for middle and low-income families.

What she failed to mention is that her Biden administration has gone even further, having once again activated Section 301 tariff sanctions, leading to increased production and living costs for many ordinary people and small private enterprises, raising market price levels.This structural inflation is not something that can be resolved by merely adjusting monetary policy. When labor-intensive enterprises experience a state of contraction, the cost of living for the public will rise significantly, leading to a vicious cycle.

Such policies of decoupling and breaking supply chains make life increasingly difficult for the middle class and those below, while those above the middle class are not much affected. Ultimately, all costs are borne by ordinary consumers, leading to an increasingly severe wealth gap.

According to a report published by a U.S. survey institution, comparing the price level in 2021 before the pandemic outbreak, the cost of living for ordinary resident families has increased by nearly 131%, and more than half of adults' incomes are no longer sufficient to cover basic living expenses.

Some analysts point out that the 2% inflation target set by the Federal Reserve cannot be truly achieved, and a 4% inflation rate may become the new normal.

Although the Chairman of the Federal Reserve has indicated that the pace of rate cuts will slow down, the U.S. banking industry will not be able to sustain itself without further rate cuts. In the past two years, many small and medium-sized banks have already gone bankrupt due to insufficient liquidity. If there is no more monetary easing now, even the banking giants will not be able to withstand such pressure.

This leads to a paradoxical contradiction: on one hand, various analysts and officials claim that the economy is resilient, employment data is stable and improving, inflation is well-controlled, and the economic development prospects are very bright.

On the other hand, they say that although there will not be a 50 basis point cut this year, a 25 basis point cut is expected, which is necessary to protect the economy from shocks.

Why do they say this? Because the shock they speak of is us; they are indeed afraid that we will take advantage of the rate cut trend to boost our market.

This is because on September 24th, our three major departments issued a notice to stimulate the economy. Since then, Chinese concept stocks, Hong Kong stocks, and A-shares have started to rise against the trend and have now become the focus of attention for major capital.

And this is just the beginning. Next, our relevant departments will definitely release more favorable policies, aiming to stimulate the development and transformation of the real economy. The financial market needs to form a virtuous closed loop that complements and promotes the real economy.If the next U.S. administration can come to realize that we are the perfect complementary partners in our economic and trade relations, and cooperate on the basis of fairness and justice, then the inflation issue will be significantly alleviated, thus achieving a win-win outcome.

If they still wish to confront us to the end, then the dynamics of the upcoming financial game have already been reversed, and they may ultimately have no choice but to surrender.