Huatai Securities: Expect the Federal Reserve to pause interest rate cuts from January to May, then cut 1-2 times after the new Fed Chair takes office.

Deep Tide TechFlow News, January 10th, according to Golden Ten Data reports, Huatai Securities research reports state that in December, the US added 50,000 non-farm jobs, below Bloomberg’s consensus expectation of 70,000, with a downward revision of 76,000 for October-November. Although the unemployment rate has slightly decreased, the significant downward revisions in the previous two months have caused the three-month average of private sector non-farm employment to fall back to a low of 29,000, and the structure has further “become unbalanced.” Looking ahead, the view remains that the employment market will gradually improve, focusing on the “temperature difference” between economic growth and employment; we expect the Federal Reserve to pause interest rate cuts from January to May, and after the new Fed Chair takes office, to cut rates 1-2 times. The December increase in non-farm employment was below expectations and concentrated in a few industries: from the employment diffusion index, December has slightly declined compared to November. Considering that recent initial claims have mostly exceeded expectations, layoffs have decreased, and leading indicators like NFIB business hiring intentions continue to improve, we still expect US non-farm employment to rebound subsequently. Pay attention to the “temperature difference” between US economic growth and the employment market. From the Fed’s perspective, although employment data is somewhat weak, it has not continued to worsen. We expect the Fed to hold off on rate cuts at the January meeting, emphasizing observation of subsequent data before making decisions. Therefore, we anticipate the Fed will pause rate cuts from January to May and then cut rates 1-2 times after the new Fed Chair takes office.