U.S. November Non-Farm Payrolls Just Released, Market Reaction Is Quite Complex 🇺🇸

Overview of the Data (November): Non-farm employment increased by 64K, exceeding the expected 50K, but the previous figure was negative at -105K. Unemployment rate is 4.6%, 0.1 percentage points higher than expected, up from 4.4% last month.

Does the number look good? But the issue is this — two indicators are sending completely opposite signals.

What does the higher-than-expected increase in non-farm payrolls mean? The U.S. labor market still shows resilience, and the economy's moderate growth continues. This gives the Federal Reserve reason to slow down the pace of rate cuts and not rush to release liquidity to stimulate the economy. But the rising unemployment rate is another story. At 4.6%, it’s the highest in four years, indicating the labor market is cooling off, and recession risks are emerging. This also gives the Fed reason to continue cutting rates to prevent an economic slowdown.

The result is — economic resilience and labor market weakness are tangled together, and the market cannot form a unified expectation. The probability of a rate cut by the Federal Reserve in January is currently less than 50%, and traders are watching closely.

Additionally, the Bank of Japan is set to raise interest rates to 0.75% this week (December 18-19), increasing pressure on the yen to strengthen. Global stock markets already saw some correction yesterday. Tonight’s U.S. stock market opening will be the real test, and subsequent statements from the Fed and December employment data will be even more worth watching.