Small non-farm employment in the United States hit a new high in more than a year, and U.S. bond yields soared. Could the Federal Reserve suspend raising interest rates in November?

The United States released the ADP employment report, known as the "Small Non-Farm", yesterday (30th). According to a CNBC report, the ADP report showed that private sector employment increased by 233,000 in October, far exceeding the Dow Jones expectation of 113,000 and higher than the revised 159,000 in September, reaching the highest level since July 2023. ADP's chief economist Nela Richardson stated: "Job growth remained strong in October and was broadly resilient, even as the economy recovered from two hurricanes." This data contradicts the market's expectations of a slowdown in the US economy and employment in October, as the US was hit by two hurricanes and affected by the Boeing and port worker strikes. The ADP Small Non-Farm report highlights the resilience of the US job market, fueling the market's expectation of a "pause in rate cuts" by the Federal Reserve in November. However, some economists believe this report is an outlier and Federal Reserve officials will not reference it in next week's monetary policy meeting. They are more focused on the non-farm employment report to be released by the US Bureau of Labor Statistics on Friday. The market expects a 100,000 increase in non-farm employment in October, with the unemployment rate remaining at 4.1%. Wharton professor Jeremy Siegel, known as the "Wharton Wizard", said in an interview on Tuesday that if the October non-farm employment report is strong, many Federal Reserve officials will likely consider pausing rate cuts at next week's meeting. On the other hand, the 10-year US Treasury yield, which is considered the "anchor of global asset pricing", has continued to rise since September, reaching 4.3% on Wednesday, the highest level since mid-July. MarketWatch reported that LPL Financial's chief technical analyst, Adam Turnquist, warned that based on past experience, if the yield continues to break above 4.3%, the US stock market may face serious trouble. He cited the example of early September 2023, when the 10-year yield breaking above 4.3% became a turning point for the US stock market to start a sharp decline the following month. Turnquist believes the yield will continue to rise, "perhaps we can go back to the April 4.7% high, which will be the last line of defense before we reach 5%." He emphasized that the key factor is the speed of the yield increase, not the absolute value, as "the yield has seen very violent fluctuations, and the volatility will be the biggest determinant of the stock market." Regarding the Federal Reserve's November meeting, it is worth noting that Deutsche Bank's interest rate strategist stated this week that "the rise in yields reflects a reduction in the risk of economic recession, and the Fed may slow the pace of rate cuts due to the strength of economic data." The CME FedWatch tool shows that the market expects a more than 96% probability of a 25-basis-point rate cut by the Federal Reserve in November. However, on Wednesday, several executives of major US financial giants expressed skepticism about the market's optimistic expectations, not expecting the Federal Reserve to cut rates further by the end of the year. According to CNBC, BlackRock CEO Larry Fink said at the "Future Investment Initiative" conference in Saudi Arabia that he believes the Federal Reserve will not cut rates as much as the market expects this year and expects only one rate cut by the end of this year, as global underlying inflation is higher than ever before. At the same conference, Morgan Stanley CEO Ted Pick directly stated that the era of loose monetary policy and zero interest rates is over, and "future interest rates will be higher, which will pose challenges globally." In a panel discussion, executives from Wall Street giants including Goldman Sachs, Carlyle, Morgan Stanley, Standard Chartered, and State Street Bank were asked if the Fed would cut rates twice more by the end of the year, and none of them raised their hands in agreement.