September Non-Farm Payrolls Data to be Released Soon, Fed's December Rate Cut Expectations Face Test

As the release of the September non-farm payrolls data approaches, market attention to the Federal Reserve’s next policy move reaches a peak. This data, which will be announced at 21:30 on November 20th, has become a key factor in deciding whether the Fed will cut interest rates in December.

Market Expectations and Policy Impact of the Employment Report

Wall Street analysts hold a cautious attitude toward this report. The market consensus expects that in September, non-farm employment will increase by 50,000 jobs, the unemployment rate will remain at 4.3%, and the annual wage growth rate will stay at 3.7%. Given that the Bureau of Labor Statistics has announced it will not release October non-farm data, this report will be the most important official employment indicator before the Fed’s policy meeting on December 10th.

According to the latest meeting minutes from the Federal Reserve, there are clear differences of opinion among policymakers on whether to adjust interest rates in December. The core controversy is that, amid ongoing inflation pressures and signs of cooling in the labor market, further easing policies might actually increase price risks.

Market Probability Judgments on Rate Cuts

The latest data from the CME FedWatch tool depicts the current market sentiment: investors believe there is a 67.2% probability that the Fed will hold rates steady in December, and a 32.8% probability of a 25 bps rate cut. This ratio has been adjusted compared to previous estimates.

However, some international financial institutions hold more optimistic expectations for rate cuts. Standard Chartered’s team predicts that, due to likely soft employment data from September to November, the Fed’s moderate stance could shift toward supporting a rate cut. HSBC Research also indicates that there is a possibility of another rate cut in December, but emphasizes that the chance of further easing in 2026 is relatively slim.

Market Trends and Investment Strategies

The strength or weakness of the non-farm employment data will directly influence the performance of the three major asset classes. If the data exceeds expectations, it will reinforce the dollar’s appreciation outlook and put pressure on gold and US stocks. Conversely, weaker data will weaken the dollar and provide upward momentum for safe-haven assets and equities.

JPMorgan’s market analysis team believes that the recent technical correction in US stocks may be nearing an end, and now is a relatively attractive entry point. Andrew Tyler, head of global market strategy, states that since the economic fundamentals have not shown substantial deterioration and investment logic does not need to rely on Fed easing policies, investors can consider positioning at lower levels. The firm specifically points out that NVIDIA’s quarterly financial performance and the timing of the September non-farm payrolls release could serve as catalysts for new highs in US stocks.

HSBC further notes that, given the limited probability of continued rate cuts by the Fed in 2026, the dollar may bottom out and start a rebound cycle in the first quarter of 2026 or earlier.