The only point of contention in the current market:
Today is a holiday in the United States, the U.S. stock market is closed, and the potential impact of the non-farm payroll data coming this Friday
The debate surrounding the Federal Reserve's interest rate direction seems to have shifted from multiple rate cuts within the year to whether there will be any rate cuts at all. The market expects over 95% probability that there will be no rate cuts in January, with some institutions even speculating that there won't be any rate cuts before July. It is very likely that the Federal Reserve will remain on hold this year, and if there are rate cuts, it might only be one.
The previous non-farm employment figure was 227,000, and the market expectation is 160,000. Based on this data, a decrease in non-farm employment is highly probable, and maintaining the unemployment rate or a slight increase is also likely. Therefore, theoretically, this is slightly positive. If the unemployment rate rises but employment also increases, it should be a significant positive. However, if the unemployment rate rises and employment declines, it indicates a downward trend in the U.S. economy.
Moreover, this data is completely opposite to the job vacancies data released on Tuesday, because job vacancies mean that employers have a higher demand for labor, which should reduce the unemployment rate and improve employment data. Thus, the market expects the economy to be strong, and the Federal Reserve will reduce or maintain the frequency of rate cuts.
However, if Friday's non-farm data shows an increase in the unemployment rate and a decline in employment, it would mean that the Federal Reserve will open up more opportunities for rate cuts, and it's a bit early to talk about an economic recession as market data is still good. Therefore, if it does happen, it should be a slight positive. Of course, if the market insists on interpreting it as an economic recession, then there's nothing we can do.
So regardless of how the unemployment rate data looks, it is always bad data: an increase in the unemployment rate suggests an economic recession, leading to an increase in rate cuts; a decrease in the unemployment rate suggests a strong economy, leading to unchanged or reduced rate cuts.
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