U.S. Jobs Surge Sends Global Markets into a Spin as Fed Cuts Look Unlikely

The recent unexpected surge in U.S. non-farm payrolls for September has stirred global markets. The data reported a robust 254,000 jobs added, significantly surpassing the forecasted 140,000. Additionally, the unemployment rate dropped to 4.1%, marking its lowest point since June 2024.

This impressive economic performance suggests a strong U.S. economy, leading to a likely appreciation of the U.S. dollar and a rise in U.S. stock markets. Conversely, this might put pressure on international markets, notably China's A-shares, due to reduced attractiveness of Chinese assets and potential yuan depreciation.

The robust U.S. employment data has prompted further reduction in speculation regarding a 50-basis point cut at the Federal Reserve's November meeting. Currently, the possibility of such a cut stands at a mere 8%, reflecting the market's adjustment to the recent data.

Despite the immediate positive reaction in the U.S. stock market following the data release, concerns linger regarding future trends. The ongoing strength of the dollar and a volatile VIX index suggest caution. Markets are now keenly awaiting the release of the U.S. September CPI data next week, which could further influence Federal Reserve decisions and provide more insight into inflation trends.

In the aftermath of these developments, experts urge a closer examination of upcoming economic indicators to assess the long-term implications. The current U.S. economic stance and the Federal Reserve's future actions remain central themes influencing market expectations globally.