The US Bureau of Labor Statistics released data last (1) night showing that the US non-farm payroll employment increased by a surprising 12,000 in October, the lowest since the pandemic, far below the market's previous expectation of 106,000; the previous value was revised down significantly from 254,000 to 223,000; however, the unemployment rate in October remained at 4.1%, unchanged from the previous value and in line with market expectations.
The probability of a 1-point rate cut this month has risen to 98.2%
In fact, the sharp drop in US non-farm employment in October is most likely related to the recent hurricane disaster and strikes in the US. In this regard, the credit rating agency Fitch has stated that the true figure for US non-farm employment in October may be 119,000:
Adding the Bureau of Labor Statistics' estimated strike impact (44,000) to the October employment gain data, and then taking the three-month moving average, the resulting figure is 119,000, which is slower than the average of 207,000 per month in the first half of this year, but far from a sharp decline.
Given the broader evidence that consumer strength is still ongoing, the Fed is unlikely to focus on the 12,000 figure.
Additionally, regarding the FOMC meeting to be held next week, Goldman Sachs also commented:
Strikes and hurricanes have impacted the non-farm data, with employment growth unexpectedly declining, but the unemployment rate remaining unchanged.
While the Fed may attribute today's data to idiosyncratic factors, the weak data suggests the possibility of a 1-point rate cut in November has increased, and they will continue their accommodative monetary policy.
According to the CME Group's Fed Watch tool, the market currently believes the probability of a 1-point rate cut this month has risen to 98.2%, while the probability of a 2-point rate cut is 1.8%, and almost no one believes the Fed will maintain its policy of keeping interest rates unchanged.
US stocks rise across the board
Affected by the non-farm employment data, the previously slightly weak US stock market has seen an upward trend, with the four major US stock indexes reporting:
- Dow Jones Industrial Average: up 1.11% or 462.97 points, at 42,231.79 points
- S&P 500 Index: up 1.07% or 61.35 points, at 5,766.80 points
- Nasdaq Composite: up 1.39% or 250.81 points, at 18,345.96 points
- Philadelphia Semiconductor Index: up 2.02% or 99.81 points, at 5,046.93 points
Bitcoin breaks through $71,000
In the cryptocurrency market, Bitcoin has also followed suit, breaking through $71,000 to reach $71,598 at the time of writing, before falling back to a low of $68,773, a gain of nearly 4% in the past 24 hours, showing a V-shaped breakout and subsequent plunge.
This has also triggered a general rise in the cryptocurrency market, as well as a surge in liquidations from both long and short positions, with over 86,000 people being liquidated across the network, with a total liquidation amount of $273 million.
