The possibility of a Federal Reserve interest rate cut this month is almost zero. Good evening, let's focus on the latest US non-farm payroll data, which will influence the Fed's rate-cutting path. Data released on the evening of January 9 by the US Bureau of Labor Statistics (BLS) showed that non-farm payrolls increased by 50,000 in December last year; data for the previous two months was revised downward. The unemployment rate edged down to 4.4%, stabilizing after the end of a record-long government shutdown. These figures conclude a year of gradual cooling in the US labor market throughout last year. Precisely because the job market cooled, the Fed implemented three consecutive interest rate cuts by the end of 2025. Although 2025 was one of the weakest years for hiring strength since 2009, employers largely avoided large-scale layoffs overall. The December data also indicates that the labor market remained fragile at year-end, with hiring prospects still cautious. Economists expect job opportunities to remain limited in the new year, and wage growth to continue cooling, which may intensify voters' concerns about "affordability of living" and amplify this issue ahead of the midterm elections this year. The data shows that seasonally adjusted non-farm payrolls increased by 50,000 in December last year, lower than the revised November figure of 56,000, and also falling short of the expected 73,000. Meanwhile, the unemployment rate dropped to 4.4%, while the market had anticipated 4.5%. Furthermore, revisions to previous months' data also lowered the total figures. November's non-farm payrolls were revised down by 8,000; the employment decline in October was larger than initially reported, now standing at a reduction of 173,000 jobs, compared to the previous estimate of a 105,000 decrease. BLS data shows that the average monthly non-farm payroll addition for the full year of 2025 was 49,000, compared to 168,000 in 2024. So, how does the latest data affect the Fed's rate cuts? Some analysis points out that because the December unemployment rate fell more than expected, traders believe the possibility of a Fed rate cut this month is almost zero. The market believes that whether there will be further rate cuts depends crucially on the labor market's performance in the coming months. Although the Fed lowered its short-term interest rate target range in the past three meetings due to labor market weakness, some officials remain concerned that inflation is above target levels, which is seen as limiting the pace of subsequent easing. John Briggs, Head of US Rates Strategy at Natixis North America, said: "For us, the Fed is more likely to focus on the unemployment rate, so in my view, this is slightly negative for US interest rates." Subadra Rajappa, Head of US Rates Strategy at Société Générale, said: "The falling unemployment rate and rising wages give the Fed more reason to stand pat in January." Swap market traders expect the Fed could cut rates by 50 basis points this year, while a January cut has basically been ruled out. Jeff Schulze, Head of Economic and Market Strategy at ClearBridge Investments, stated: "On the positive side, the unemployment rate fell to 4.4%—the rise in unemployment over the past year has been a key market concern and an important sign of labor market weakness. On the negative side, the data revisions show that actual job additions were lower than previously thought, with private sector employment bearing the brunt of the downward revisions. This outcome should keep the Fed on hold for now, but the committee will still closely monitor signs of further labor market deterioration." Karen Georges, Fund Manager at Paris-based Ecofi Investissements, believes, "This data is not a disastrous result; the market's view is that, for now, the Fed will be satisfied with these mediocre numbers."
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