Institutions: The threshold for a Fed rate cut in January remains high, and there is room for a pause in rate cuts.
PANews reported on January 11th that, according to a research report by Guotai Haitong Securities, the low hiring and low layoffs in the US job market continued in December. On the one hand, the unemployment rate fell more than expected to 4.4%, interrupting the continuous upward trend; but on the other hand, new job creation continued to slow down, and subsequent annual revisions may be further downward. Since the unemployment rate in December has not risen further and many employment indicators show that the risk of a slowdown in the US job market is still low, the Federal Reserve may still have room to pause rate cuts after three consecutive rate cuts. According to CME data, after the release of the non-farm payroll data, the market expected only a 5% probability of a rate cut in January. The market still expects the Federal Reserve to cut rates twice in 2026, but the timing has been pushed back to June and September 2026. The main catalysts for further rate cut expectations will likely be the appointment and statements of the new Federal Reserve Chairman.
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