ALERT: Federal Reserve Cancels Rate Hike?!?
In a Nutshell
Bad jobs data (–23k vs +85k expected) crushed the odds of a Fed rate hike, sending the Nasdaq up 1%. A weakening labor market now outweighs inflation fears, so traders are celebrating a pause—or better yet, a future cut—over any further tightening. Meanwhile, Japanese bond yields are spiking, prompting the first U.S. Treasury intervention in 28 years to keep Japan from dumping U.S. bonds and pushing yields higher.
These notes were generated by AI and may contain inaccuracies.
The market is reacting to the probability of a rate cut instead of a rate hike. The NASDAQ market is up 1%. The economic calendar in the description contains the economic report that was released today.
Non-farm payrolls showed 23,000 jobs were removed. The expectation was 85,000 jobs to be added. The unemployment rate came in lower than expected. Private non-farm payrolls showed 30,000 jobs were added when the expectation was 78,000 jobs.
Markets have been uncertain about inflation rising. Kevin Walsh, head of the Federal Reserve, and other Fed members have discussed that if inflation continues to rise, rates might need to be hiked. Raising interest rates is not bullish for the market. The US economy lost 23,000 jobs when it expected to add 80,000 jobs.
Jerome Powell called the situation a double-edged sword. Raising interest rates can help inflation but weakens the labor market. A weaker labor market puts the Fed in a position where they are less likely to raise rates because it would worsen the labor market. If the labor market becomes more pressing than inflation, the Fed will prioritize the labor market and therefore stop raising rates.
The likelihood and probability of an interest rate hike just dropped, which is celebratory for the overall market. Markets want rate cuts but will take a rate pause at this point.
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