Will the Federal Reserve's Q1 hold steady? Barclays: Payroll data is unlikely to change expectations

The Federal Reserve’s policy stance is becoming a focal point for market attention. According to the latest news, Julien Lafargue, Chief Market Strategist at Barclays, stated that the upcoming revision of US payroll data may not be able to shake the market’s expectation that the Fed will keep interest rates unchanged in the first quarter. This view reflects the current firmness of policy expectations and also hints that multiple factors are jointly shaping the Fed’s decision-making environment.

Payroll Data: Important but Possibly Insufficient

Significance of Payroll Data Revisions

Payroll data revisions are indeed worth close attention. This set of data can reveal the actual impact of the US government shutdown on the employment market, helping markets and policymakers more accurately assess the true state of the labor market. Barclays pointed out that these revisions will be closely watched, indicating that the market indeed considers employment data an important reference.

Limited Potential to Change Expectations

Although payroll data are important, Barclays believes that these data are unlikely to significantly alter market expectations. What does this mean? It means that the market’s expectation for the Fed to keep rates steady in Q1 is already quite stable, and unless extremely unexpected data emerge, it will be difficult to shake this outlook. From this perspective, employment data will be analyzed but may have already been partially digested by the market.

Multi-dimensional Considerations in Fed Decision-Making

The Fed’s policy decisions are driven by multiple factors. According to Barclays, at least three key factors need to be considered simultaneously:

• Employment Report: Important but not the only factor; payroll revisions are just one reference
• Inflation Situation: Continuous monitoring of whether price pressures truly ease, which directly affects the room for rate cuts
• Tariff Policies: Rulings by the US Supreme Court on reciprocal tariffs could bring about changes in inflation expectations, thereby influencing the Fed’s policy judgment

These three factors form a complex decision-making framework. Any significant change in one of these factors could influence the Fed’s final decision, but currently, all seem to point toward a relatively stable expectation: interest rates will remain unchanged in the short term.

Market Implications and Follow-up Focus

Implications for the Crypto Market

The market’s expectation of unchanged interest rates by the Fed has a clear impact on the crypto market. A stable interest rate environment means relatively controllable liquidity conditions, avoiding sharp tightening shocks. This is generally friendly to risk assets, including cryptocurrencies. From this perspective, the stability of market expectations itself is a signal of stability.

Indicators to Watch Continuing

While payroll data may not be enough to change expectations, the following should still be monitored:

• The trend of inflation data, especially whether core inflation continues to decline
• Final rulings on tariff policies and their actual impact on prices
• Subsequent statements from Fed officials

Summary

Barclays’ view reflects an important consensus in the current market: the expectation that the Fed will keep interest rates unchanged in Q1 is already quite solid, and a single employment data revision is unlikely to alter this outlook. This not only indicates the stability of market expectations but also suggests that the Fed’s policy environment is constrained by multiple factors. For investors focused on macro policies, the key is not just the release of individual data but the comprehensive evolution of employment, inflation, tariffs, and other dimensions. In the short term, this stable policy expectation may provide a relatively friendly environment for risk assets.