I. What Can the October Non-Farm Payrolls Report Change?
1. Could it be the "final push" to determine the December interest rate decision? — The September non-farm payrolls report showed only 29,000 new jobs, surprising the market. Given the potential sticky inflationary pressures in the US, a moderate rebound in employment data could give the Federal Reserve a legitimate reason to raise interest rates by another 25 basis points in December. According to CME FedWatch, the probability of a December rate hike is currently around 68.7%.
2. Adjusting Post-Election Market Attention Back to Fundamentals — Over the past two weeks, the market has focused on the political uncertainty surrounding the midterm elections. Tonight's non-farm payrolls data, as the first major data release after the election, could forcefully pull market attention back to real fundamentals.
3. Clarifying Whether the September disappointing data was "short-term noise" or a "stalling trend" — Wall Street currently highly suspects that the previous weak data was influenced by seasonal factors. The ADP employment report released on Wednesday showed a modest increase of 86,000 jobs in October. If tonight's non-farm payrolls data corroborates this, it will support the view that the labor market is merely "cooling down" rather than "stalling."
II. Can a Single Data Point "Determine What Happens After December"?
1. The Long-Term Destructive Power of Political Restructuring Far Exceeds that of a Single Month's Data – With the midterm elections settled, the future tariff policies and fiscal budget negotiations between the two parties may be the "main force" influencing the long-term US inflation center. A single October employment report covers only one aspect of the labor market, but it cannot cover variables such as the tariff path, fiscal deficit, and geopolitical conflicts.
2. Difficult to Bridging Wall Street's Divergence on the Path After December – Tonight's non-farm payroll data is unlikely to bridge the huge differences in opinions among major investment banks. Some institutions predict that the Federal Reserve will raise interest rates consecutively in December of this year and March 2027, while others believe that the Fed will extend its window of inaction after 2026.
3. The Fed's internal divisions on the "neutral interest rate" remain unresolved – even strong tonight's jobs report won't answer policymakers' concerns. Analysts point out that the Fed has essentially abandoned providing long-term forward guidance, and this internal structural debate over the anchor point of the long-term neutral interest rate cannot be definitively resolved by data from a single month.
