Recent non-farm payroll data indicates that the U.S. economy is not experiencing a recession, and inflation remains volatile. This presents challenges for the Federal Reserve's ongoing interest rate cuts. U.S. Treasury yields continued their decline from late last week. The benchmark Treasury yield returned to 4% for the first time since August, with the 10-year yield rising by 4 basis points to 4.01%, and the 2-year yield increasing by 8 basis points to 4%.
On October 4, data showed that U.S. non-farm payrolls in September increased by 254,000, significantly surpassing the expected 150,000. This figure exceeded all economists' forecasts. August's data was revised up from 142,000 to 159,000, while July's employment figures were revised up by 55,000 to 144,000, resulting in a total upward revision of 72,000 for July and August combined.
The U.S. unemployment rate also came in lower than expected, at 4.1% in September compared to the anticipated 4.2%, with August's figure previously recorded at 4.2%. The robust labor market has led to higher-than-expected wage levels, with average hourly earnings in September growing 4% year-over-year, the highest since May, against the expected 3.8%, which was the rate for August. Month-over-month, September's average hourly earnings rose 0.4%, compared to the expected 0.3%, and matched the 0.4% increase in August.
The development of the U.S. economy, non-farm employment figures, and inflation conditions, along with the Federal Reserve's interest rate policy, influence global central bank monetary policies. The Fed closely monitors non-farm employment data, as unexpected declines in employment can help predict consumer spending, a major driver of the U.S. economy.
Previously, an unexpected cooling in the labor market led to recession concerns for the Fed, prompting a significant rate cut of 50 basis points in September. Following the latest non-farm payroll data, traders have retracted their bets on a 50 basis point rate cut in November and now expect a total rate cut of less than 100 basis points over the next four meetings, with 25 basis point cuts anticipated in both November and December.
