Fangzheng Securities: Market Prices Fed Not Cutting Rates in January, Earliest Possible Rate Cuts in June

On January 10, according to Jinshi Data, Fangzheng Securities research report stated that December non-farm data was mixed, with the U.S. employment market showing an overall moderate downward trend, but marginal improvement in the unemployment rate, giving the Fed more reasons to wait and see in January.

Combined with the possibility that the Supreme Court may declare IEEPA tariffs unconstitutional, which could be short-term bullish for U.S. stocks and the dollar, and bearish for U.S. Treasury bonds: new job additions, job vacancy rates, wage growth rates and other data indicate that the U.S. employment market in December remains relatively weak, but the marginal decline in unemployment data is one of the few bright spots.

From interest rate futures and Treasury bond trends, after data release, the market prices in that the Fed will not cut rates in January, with the earliest possible rate cuts in June. At the same time, due to the recent possibility that the Supreme Court will declare IEEPA tariffs unconstitutional, it means economic expectations may marginally improve, inflation pressure weakens, but fiscal deficits worsen. Under the combination of the Fed not rushing to cut rates + tariff cooling, short-term U.S. Treasury bonds have more unfavorable factors with a high probability of running at elevated levels. U.S. stocks benefit from AI prosperity + reduced tariff disruptions, especially in staple consumption and industrial sectors that suffered from tariffs showing greater elasticity.