The U.S. economy created a slight rebound in job openings in August, but below expectations. Although the data doesn't look too bad at first glance, the significant reduction in new employment numbers for July and June suggests that the labor market cooled earlier than it seemed.

The seasonally adjusted non-farm employment in the U.S. recorded an increase of 0.142 million people in August, less than the expected 0.16 million, marking the largest increase since June of this year. The U.S. unemployment rate fell as expected from 4.3% to 4.2% in August, hitting a new low since June of this year, and decreasing for the first time in four months of consecutive rises. The annual wage growth rate in August was recorded at 3.8%, higher than the expected 3.7% and the previous value of 3.6%.

After the release of US employment data in August, the three major US equity futures indexes rose short-term, with Dow Jones and S&P futures turning positive. US Treasury yields plummeted, with the 2-year Treasury yield falling to 3.642%, the lowest level since May 2023; the 10-year Treasury yield fell to 3.714%. The US dollar index fell nearly 60 points in the short term, while non-US currencies rose across the board. Spot gold experienced a drop followed by a rise, with a short-term volatility of $15 and briefly approaching the $2530 level.

Traders have increased their bets on a 50 basis point rate cut by the Federal Reserve in September. According to the latest data, the CME's "FedWatch" tool, which tracks the movement of federal funds futures contracts, shows that the probability of a 50 basis point rate cut in September has risen to 59%, while the probability of a 25 basis point rate cut is 41%.

It is worth noting that the previous value of U.S. non-farm employment growth has been significantly revised downward. The U.S. Bureau of Labor Statistics stated that the new non-farm employment in June was revised from 0.179 million to 0.118 million; and the new non-farm employment in July was revised from 0.114 million to 0.089 million. After the revision, the total new employment in June and July was 0.086 million lower than the unrevised figure.

In terms of unemployment, the unemployment rate in August was 4.2%, with 7.1 million unemployed. These figures are higher than a year ago, when the unemployment rate was 3.8% and the number of unemployed was 6.3 million.

Analyst Chris Anstey stated that ultimately, this report suggests that the job market will further cool down rather than 'bottom out'.

Analyst Enda Curran said that it is obvious that the downward revision of the employment growth of 0.086 million people in June and July is one of the biggest gains in today's data, as it adds to the view that the labor market is weaker than implied by the overall data. It is not difficult to imagine another revision in August.

However, the Wall Street Journal believes that the latest non-farm payroll report does not clearly eliminate the uncertainty of whether Federal Reserve officials will cut interest rates by a more traditional 25 basis points or a larger 50 basis points.

"Fed Whisperer" Nick Timiraos also said that he originally thought that the non-farm payroll report might provide a clear signal about the magnitude of the Fed's first rate cut, whether it is 25 basis points or 50 basis points, and market pricing would immediately rise to 90%. But this non-farm payroll report did not resolve this issue well, and at present, the market pricing of whether the rate cut is 25 or 50 basis points is "half open". Overall non-farm data has not deteriorated enough to change the benchmark expectation to a 50 basis point cut, but considering the revised data, it is not convincing enough to dispel speculation about a larger rate cut.

BlackRock's senior portfolio manager Jeffrey Rosenberg is concerned that if the Fed's easing this month is 50 basis points, it may imply concern about the economy rather than reassuring that decision-makers are taking timely action to avoid an economic recession.

After the latest non-farm payroll data was released, New York Fed President Williams delivered a speech, but did not comment on the specific size of the rate cut.

Williams said that it is appropriate for the Fed to cut interest rates now, given the progress in reducing inflation and cooling the job market. The Fed has made "significant progress" in achieving the dual goals of maintaining price stability and full employment, and the risks of achieving these two goals are now in a "balance" state. He now has more confidence that inflation is continuing to move towards the central bank's 2% target and added that the labor market is unlikely to be a source of future price pressures.

Although Williams did not reveal the magnitude of the Fed's first rate cut, he stated that officials can steer policy towards neutrality. Over time, this will depend on the evolution of data, prospects, and the risks of achieving the inflation target.

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