Guotai Haitong: Only a 5% Probability of Fed Rate Cut in January

According to a research report by Guotai Haitong, in December, the U.S. job market continued to experience low hiring and low layoffs, with the unemployment rate unexpectedly falling to 4.4%. The growth of new jobs showed a slowing trend, and subsequent annual revisions may result in downward adjustments. Since the unemployment rate did not rise further and the risk of a sharp slowdown in the job market remains low, the Federal Reserve may have room to pause interest rate cuts. CME data shows that after the release of the non-farm payroll data, the market expects only a 5% probability of a rate cut in January. In 2026, the market expects the Federal Reserve to cut rates twice, with the timing postponed to June and September. Future expectations for rate cuts may depend on the appointment and statements of the new Federal Reserve Chair.