US non-farm data in December exceeded expectations, and financial markets are in turmoil again

December seasonally adjusted non-agricultural data

Macro Global Markets：In December 2024, the U.S. economy added 256,000 jobs, which was consistent with market expectations of 160,000 and the highest since April 2024. Adjustments were made, resulting in a total of 8,000 jobs being refunded in October and November.

In addition, retail trade increased its labor force by 43,000 in December after losing 29,000 in November, mainly due to increases in clothing, apparel, footwear and goods (23,000), miscellaneous goods (13,000), and health and personal care (13,000). 7,000 workers. The data still points to a strong and stable labor market.

Non-agricultural data exceeded expectations: US job market is good, bullish for the dollar, bearish for gold

Market changes after non-agricultural

Foreign exchange market

US Dollar Index:It rose this week, closing at 109.64, marking its sixth consecutive weekly gain. .

GBP:It fell sharply to its lowest level since November 2023. Options trading volume soared on Wednesday, with hedge funds buying a large number of put options, and the cost of hedging against a decline in the pound in the next week soared.

Japanese Yen:The dollar rose to its highest level against the yen since July 2024 at one point, and the Governor of the Bank of Japan is likely to keep the yen relatively weak.

Asian Currency:The Asian currency index fell to a 20-year low as the dollar rose across the board.

Gold Market

Spot gold rose for four consecutive days this week to a new high, with a cumulative increase of 1.9%. It fell sharply in the short term after the non-farm data on Friday, but the news of the Houthi armed attack on the US rifles quickly recovered the lost ground and turned to rise, closing at about $2,690 an ounce.

Oil Market

International crude oil prices closed higher overall this week, with a sharp increase on Friday, as the cold winter led to strong oil demand and recent adjustments and upgrades may lead to tight supply of Russian and Iranian crude oil.

stock market

The Nasdaq fell 2.34% this week, the S&P 500 fell 1.94%, and the Dow Jones Industrial Average fell 1.86%, with all moving averages falling.

Bitcoin

The market fluctuated violently this week. After briefly returning to the $100,000 mark at the beginning of the week, it fell for three consecutive days. On Friday night, more than 12 people had their positions liquidated in 24 hours, with a total liquidation amount of $336 million.

The impact of strong non-farm payrolls on US debt and interest rate cut expectations

Strong U.S. labor market data led traders to delay the next Federal Reserve rate cut until the second half of the year, causing expected U.S. debt to plummet. The highest since 2023.

Professionals believe that the strong employment data has caused the market to reprice the Fed's short-term expectations, leading to a flattening of the oval bear market. The continued disappearance of the huge "dragon" may prevent the Fed from further rate cuts, but the market has not considered this situation.

A broad rally in U.S. Treasuries had calmed U.S. stocks because of expectations for economic growth and a rate cut by the Federal Reserve. , but most strategists still expect U.S. stocks to rise this year.

Authoritative opinion

Citi:

The rate cut will be 25 basis points, but it will start in May instead of January as previously expected. The interest rate will be cut by 25 basis points each in June and December 2025 (the UAE expects three interest rate cuts), and cut again in June 2026, maintaining the interest rate at 3.5%-3.75%.

CME Group:

CME's "Federal Reserve Data Watch" tool shows that the market expects the probability of at most one interest rate cut this year to rise to more than 60%. Against the backdrop of a possible rate cut, the probability of no rate cut in March has now risen from 56% before the data was released to 70%.

Goldman Sachs:

Tony Pasquariello, head of hedge fund research at Goldman Sachs, said U.S. stocks are at all-time highs in both absolute and relative valuations. Fair value. The current U.S. stock market is at the beginning, not the dawn.

BofA Securities:

Aditya Bhave, an American economist at Bank of America Securities, warned that the baseline forecast is that the Fed will keep interest rates unchanged, but the risk of the next move is already tilted towards raising interest rates. The attitude towards interest rates tends to be restrained, but if the inflation indicator PCE (personal consumption expenditure price index) that the Fed is worried about accelerates again, the possibility of raising interest rates will be put on the table.

Nonfarm payrolls growth in December was driven primarily by health care and social assistance, retail trade, and leisure and hospitality. Despite rising nuclear weapons costs, lingering inflation and political uncertainty, the U.S. job market performed well last year. , down from 3 million in 2023 but up from 2 million in 2019.