Using interest rate cuts or not, the dog house comes to harvest

The non-farm payroll data for September was just released. To be honest, this data is not very useful because it is all from before the shutdown. However, due to the shutdown, the October non-farm data may not be released, so the September non-farm data becomes the only non-farm labor data for the Federal Reserve before the December monetary policy meeting.

Why do I say this? Because besides the non-farm data, there are also ADP and Challenger data, as well as initial unemployment claims, which can provide some guidance. I say the September data is not very significant because many large companies have laid off employees in October and November, and this is not reflected in the September data. Moreover, the labor loss data caused by the shutdown is also not included.

However, the important unemployment rate data has changed; in September, it reached 4.4%. It is expected that the October or November rate may exceed 4.5%. This is the neutral value for the Federal Reserve in 2025, which is also the alert value. The rise in the unemployment rate is conducive to stimulating the Federal Reserve to cut interest rates.

Of course, this also indicates that the U.S. economy may face risks, and wages are declining. These are not good news, but they do favor interest rate cuts. The probability of an interest rate cut in December is still 50-50.

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