I just saw two pieces of news:

As shown in the chart: economists and Wall Street say the probability of a recession has dropped to 25%, with inflation expectations revised upward to 3.4%; the following views are based on the assumption that subsequent data will support these forecasts.
Taken together, these two data points essentially confirm that the “No Landing” scenario—the one the market least wants to face—is being validated. Wall Street has been front-running trades “recession will force the Fed to pump liquidity,” but this fantasy has now been completely shattered.
The substantive impact on the tape comes down to extreme divergence in pricing power and a reset in liquidity expectations.
On the macro level, if the economic fundamentals have not broken down, corporate earnings (EPS) have a floor; but if inflation won’t come down, the Fed has the strongest possible reason to keep dragging out the high-interest-rate environment (“Higher for longer”). As long as the risk-free yield stays elevated, the broad-based rally in valuation expansion (PE) driven by liquidity overflow is completely over.
When it comes to U.S. stock holdings, the coming market will be a meat grinder. With the combination of high rates and inflation, capital will be extremely realistic—clustering aggressively around megacaps with absolute pricing power. Because only these leading companies can pass inflation costs to downstream players, and they still have abundant cash flows to earn interest. Meanwhile, mid- and small-cap stocks (Russell 2000) that rely on low-cost debt to stay alive, and unprofitable growth stocks, will be slowly worn down under the high costs of debt rollover (Rollover). The index may hold steady, but beneath it, individual stocks will be severely torn apart.
As for gold, under this data, the logic is actually even more solid. In theory, delaying rate cuts eliminates the negative effect, but against the backdrop of a real upward shift in the inflation center of gravity (raised from 3.2% to 3.4%), gold is no longer priced on short-term interest rate fluctuations—it’s priced on a long-term anti-inflation benchmark and credit hedging. This is also the core reason why even with Treasury yields so high, gold can’t be smashed down deeply.
All in all, give up the obsession with the Fed quickly cutting rates and flooding the market with liquidity. The next trading environment won’t have a broadly beneficial β—only brutal α: whoever has real cash flow and a moat can get through this high-rate era; everyone else will be slowly drained by liquidity.
$XAU