The US Bureau of Labor Statistics released data last (6th) night showing that the US added 227,000 non-farm jobs in November, higher than the market expectation of 202,000, and better than the market expectation; the previous value was revised up significantly from 12,000 to 36,000; however, the unemployment rate in November also rose from 4.1% in the previous month to 4.2%.
The probability of a 1-basis point rate cut this month has risen to 85.1%
Although the non-farm employment and unemployment rate data are mixed, the slight increase in the unemployment rate has led the market to expect the Federal Reserve (Fed) to implement a rate cut at its FOMC meeting this month.
Renowned economist Mohamed El-Erian described the November employment data as "somewhat strong, but not too strong", which could pave the way for a rate cut in December:
Although wage growth remains strong, the rise in the unemployment rate allows the Fed to comfortably cut rates by one basis point.
According to the CME Group Fed Watch tool, the current market expectation for a 1-basis point rate cut this month has risen to 85.1%, up 13.3 percentage points from the 71.8% expected by the market at noon yesterday; the probability of no rate cut has dropped to 14.9%.
Fed official: If inflation flares up again, the Fed is ready to raise rates again
In addition, San Francisco Federal Reserve Bank President Mary Daly said in a speech after the release of the non-farm data yesterday (6th) that the current labor market remains strong, however, the Fed faces many economic uncertainties in policy making, especially in the balance between the labor market and inflation. In this regard, Daly said:
If inflation accelerates again, the Fed will be ready to raise rates at any time.
In addition, Daly also said that so far, the Fed has adjusted its policy through rate cuts, and the current interest rate has reached a "roughly appropriate" level, and therefore, he supports a gradual approach and cautiously faces the upcoming economic changes:
The degree of policy coordination among central banks around the world has clearly declined, and the response measures of various countries are no longer as consistent as before, which further increases the uncertainty about the economic outlook. There is also a lack of clear answers on the speed at which inflation returns to the 2% level and the sustainability of the labor market.
Grayscale: The growth of the crypto market will continue into next year
On the other hand, according to a report by Cointelegraph, Grayscale Investment Research Chief Zach Pandl wrote in a statement that the employment data released yesterday could be a reason for the Fed to cut rates, and it is also positive for Bitcoin and other currencies:
Yesterday's employment report is likely to further cement the case for the Fed to cut rates again at its upcoming meeting. All else equal, a decline in the official interest rate typically puts downward pressure on the dollar's value, while benefiting other currencies, including Bitcoin.
Pandl then said:
Although Bitcoin's price fell below $100,000 yesterday, Grayscale still believes the upward trend in cryptocurrencies is likely to continue into next year.
