On Friday, the addition of non-farm payrolls in the US fell far short of expectations in July. The unemployment rate rose to 4.3%, higher than the long-term unemployment rate of 4.2% predicted by the Federal Reserve recently, and triggered the “Sam Rule”, fueling concerns about the recession.

The so-called “Sam's rule,” when the 3-month average unemployment rate is 0.5 percentage points higher than the previous 12-month low, means that the economy is already in recession. According to the latest US situation, the unemployment rate for May and June was reported at 3.96% and 4.05% respectively. The unemployment rate also rose to 4.3% in July, which is 0.5 percentage points higher than the lower level, which has triggered Sam's rules and technology to fall into recession.

Judging from historical data, once the “Sam Rule,” an indicator of economic recession, was triggered, it was like completely opening the magic box of economic recession. Since Federal Reserve economist Sam proposed the “Sam Rule,” the accuracy of this indicator's prediction of economic recessions can be called 100%. Of the 11 US recessions since 1950, the “Sam Rule” has all been confirmed.

However, the market unearthed more of the truth hidden behind poor employment figures from recent non-farm payrolls data — that is, the unemployment rate unexpectedly rose by 0.2 percent, mainly because temporary layoffs increased by 0.249 million people after Hurricane Beryl. The analysis predicts that the unemployment rate will fall back to around 4.1% in August.

However, after the release of the non-agricultural data, the Wall Street Investment Bank quickly overhauled the script for interest rate cuts:

The Citigroup and Xiaomo teams all expect that the Federal Reserve will cut interest rates by 50 basis points each in September and November, and will also cut interest rates by 25 basis points each time starting from the December meeting

The Goldman Sachs team believes that if the August data is similarly weak, it “will be possible” to cut interest rates by 50 basis points in September

The Bank of America, on the other hand, moved the start of the interest rate cut cycle from December to September.

According to CME's “Federal Reserve Watch” tool, the median forecast also believes that “50 basis points+50 basis points+25 basis points” is the bank's most likely path to cut interest rates.

How can I protect my “money bag” by trading now?

In the current environment, it may be wise to allocate safe-haven ETFs. These ETFs usually invest in low-risk assets, such as treasury bonds and defensive stocks, to provide stable returns during periods of market fluctuations.

• US Treasury ETF

America's worrying economic situation has deepened risk aversion in the market. Recently, US debt has continued to rise. US 10-year Treasury yields fell below 4% for the first time since February, and 2-year Treasury yields hit a 14-month low.

Furthermore, the early days of the Fed's interest rate cut were the best trading period, and there is a high degree of certainty that US bonds will rise. The representative product of ultra-long term bond ETF is owned by BlackRock iShares$iShares 20+ Year Treasury Bond ETF (TLT.US)$TLT mainly holds US Treasury bonds for more than 20 years. These bonds have a long term and are very sensitive to changes in interest rates.

As can also be seen from the chart below, TLT has often performed excellently when the Federal Reserve has cut interest rates.

Interest rate cuts are good for US debt. How can I find my favorite ETF? Open the Futubull App to make good use of the themed ETF function! Click Market>ETF>Themed ETF>US Treasury bond ETF,Check out more than 60 ETFs >>

• Defensive Stock ETF

Interest rates are expected to fall as the job market cools, which will drive the continuation of so-called “rotating transactions.” Defensive ETFs mainly invest in stocks in defensive industries such as utilities, consumer necessities, and healthcare, which generally perform well during recessions.

As the interest rate cut cycle approaches, US Treasury yields have fallen sharply, and investors are pouring into stocks that pay dividends and are less volatile, from utilities to real estate investment trusts.

Investors turned to the US last week, according to data from Bloomberg Industry Research$Real Estate (LIST20753.US)$und$Utilities (LIST20765.US)$The industry's exchange-traded funds invested nearly $1 billion, while the investment in tech ETFs was only $0.3 billion.

Currently, in fact, defensive ETFs have performed well in the US stock market this year, such as utility ETFs$Utilities Select Sector SPDR Fund (XLU.US)$,$Vanguard Utilities ETF (VPU.US)$During the year, the increase was over 19%.

In the consumer necessities industry ETF$Consumer Staples Select Sector SPDR Fund (XLP.US)$,$Vanguard Consumer Staples ETF (VDC.US)$The year-on-year increases were over 11%.

Healthcare ETF$The Health Care Select Sector SPDR® Fund (XLV.US)$,$Vanguard Health Care ETF (VHT.US)$Both increased by about 11%.

In the real estate industry, such as$Vanguard Real Estate ETF (VNQ.US)$,$Real Estate Select Sector Spdr Fund (The) (XLRE.US)$Both increased by more than 5%.

Additionally, such as global defensive stock ETFs$Ishares Trust Global Consumer Staples Etf (KXI.US)$,$Ishares Trust Global Utilities Etf (JXI.US)$These two ETFs rose nearly 7% and 13%, respectively.

KXI invests in stocks of global consumer necessities companies, covering developed and emerging markets; JXI invests in shares of global utility companies, providing an internationally diversified investment portfolio.

High dividend stock ETF$Vanguard Dividend Appreciation ETF (VIG.US)$,$Schwab US Dividend Equity ETF (SCHD.US)$An increase of more than 10% has been recorded during the year.

Want to know which industry is popular? The Futubull ETF heatmap helps you! Click Market>ETF>heatmap>Industry, see the direction of the market at a glance!

• Volatility ETF

Additionally, investors can hedge against market fluctuations by investing in volatility indices (such as VIX).

For example,$ProShares Ultra VIX Short-Term Futures ETF (UVXY.US)$,$2x Long VIX Futures ETF (UVIX.US)$,$ProShares VIX Short-Term Futures ETF (VIXY.US)$,$iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX.US)$Wait, the cumulative increase in these ETFs over the past month is in the 20%-40% range.

In addition to this, VIX call options are also often used as hedging tools.

Generally speaking, when investors are concerned that the market may fall sharply, they buy VIX subscription options (Call) as insurance to cover losses through the rise of VIX when the market falls. Currently, Futu also supports VIX index trading.Click here to enter the VIX Options Chain>>

It's worth noting that when you trade VIX, you're actually buying and selling the market's volatility, not the price of an individual stock or asset. Therefore, the key is to observe how volatile the overall market is, rather than whether a specific price rises or falls.

Keep in mind that market volatility changes all the time. The VIX Index only reflects short-term fluctuations and is not suitable for long-term holding.

Therefore, whether it's VIX options, ETFs, or futures, you need to keep an eye on market trends and be prepared to stop losses at any time to prevent losses.

Cow friends,

What do you guys think of this drop?

Should I cut it down or drop it in the bag for safety?

Welcome to leave your thoughts in the comments area~

Editor/Somer