CAIjing Society news on October 5th (Editor Zhao Hao) Pre-market trading in the US on Friday, October 4th, data released by the US Bureau of Labor Statistics showed that the number of non-agricultural jobs added in the US in September was 0.254 million, the largest increase in six months, far exceeding the market's previous expectations of 0.14 million.

Additionally, the data for July has been revised upwards from 0.089 million to 0.144 million; for August, revised from 0.142 million to 0.159 million. The report also shows that the September unemployment rate unexpectedly dropped from 4.2% to 4.1%, with average hourly wages increasing by 0.4% month-on-month and 4% year-on-year, both higher than the market's expectations of 0.3% and 3.8% respectively.

Unemployment rate & Changes in non-agricultural employment

The CME's "Fed Watch" tool shows that after the report is released, the market expects a 99.1% chance of a 25 basis point rate cut in November, with an additional 0.9% probability of no rate cut. Prior to the report, the probability of a 25 basis point and 50 basis point rate cut was "seven-three".

Journalist Nick Timiraos, also known as the 'New Fed News Agency,' described this as a very strong employment report on social media.

Adrian, an advisor at Allianz, stated that the employment report reminds people that 'inflation has not disappeared' and the Federal Reserve needs to refocus on restraining prices, 'if you look at it on the surface, this is a strong labor market in the late stage of the cycle.'

Adrian told the media, 'For the Fed, this means working harder to control pressure from the labor market. For the market, this weakens previous expectations of the Fed being too aggressive in rate cuts.'

Former US Treasury Secretary Summers posted pointing out that the Fed's '50 basis point rate cut in September' was a mistake (although not very severe in consequences). Given this data, 'soft landing' and 'hard landing' are risks that the Fed must consider.

Summers wrote that nominal wage growth is still far above pre-COVID levels and does not seem to be slowing down, 'today's employment report confirms our suspicion that we are in a high neutral interest rate environment, caution is needed when cutting rates.'

Meanwhile, 'dovish' Fed official and Chicago Fed President Evans praised the employment report, warning not to overly rely on one month of data, and added that there is a risk of inflation falling below the central bank's 2% target.

Evans stated, 'If you look at expectations, you will find indications that the inflation rate might be below the 2% target, and we also hope that the outside world will take note of this.' On the neutral interest rate, 'it's difficult to say exactly what it is. In my view, it is definitely higher than zero rates before the COVID outbreak.'

Editor / jayden