Is the Federal Reserve really about to stop? The non-farm payroll data this time is a bit heartbreaking.

Breaking it down—unemployment rate dropped directly to 4.4%, which looks good, but the problem is that the hiring side is exploding. In December, only 50,000 jobs were added, and the previous month cut 76,000, which is the worst since the pandemic. Throughout 2024, only 584,000 jobs were added, with an average of just 61,000 per month in the private sector, the weakest since 2003.
As soon as the data was released, the market exploded. Interest rate swap trading immediately set the probability of a rate cut in January to zero, pushing the first rate cut expectation to June. The two-year U.S. Treasury yield surged upward, and traders are now just watching the show.
Interestingly, the real reason for the falling unemployment rate is that the labor participation rate is declining. Simply put, many people have just given up, and the number of people not looking for work is increasing. PGIM mentioned that the Fed might "skip a rate hike," and Natixis also thinks the pace of rate cuts needs to slow down.
Wages increased by 3.8%, surpassing inflation, so on the surface, the labor market looks critically ill, but in reality, it’s still holding on. The real variable to watch is the March CPI data, which will be the key to whether the Fed can move in June. The fate of the dollar and the crypto market now hinges on this.