Fed Maintains Current Interest Rate Probability Increased After Non-farm Payrolls Data Release

Summary

Following the release of non-farm payroll data, the probability of the Federal Reserve maintaining interest rates in January has increased to 97.2%, while the likelihood of a 25 basis point rate cut has dropped to 2.8%.Zhitong

Impact Analysis

So they’re basically admitting that the labor market isn’t as robust as they’d hoped. The non-farm payrolls came in below expectations, with only 50,000 jobs added versus the anticipated 60,000, and the unemployment rate slightly improved to 4.4%.QQ News This has pushed the Fed to lean heavily towards maintaining rates, with a 97.2% probability of no change in January.Zhitong The timing here is crucial—right after the jobs report, which shows the Fed is prioritizing stability over aggressive rate cuts. This cautious stance suggests they see more downside risk in the economy than previously thought. For the portfolio, this means we should be wary of sectors sensitive to interest rate changes, like financials, and perhaps look at safe-haven assets like gold, which saw a slight uptick post-announcement.QQ News The market might be underestimating the Fed’s cautious approach, so there’s an opportunity to position for less aggressive monetary policy moves in the near term.