Bitunix analyst: Unexpected cooling in nonfarm payrolls, weak employment provides room for the Fed to pause rate hikes.

October 5: U.S. nonfarm payrolls increased by only 29,000 in September, far below the market expectation of 90,000, while the unemployment rate rose to 4.2%, and job gains for July and August were revised down by a combined 60,000, bringing the three-month average increase to about 50,000. Average hourly earnings rose only 0.1% month over month and 3.0% year over year, indicating that hiring momentum and wage pressure are slowing in tandem. Although the September data may have been distorted by seasonal adjustment and calendar factors, and initial jobless claims remain low with no obvious increase in corporate layoffs, the pattern of "low hiring, low layoffs" already shows that companies prefer to retain existing employees rather than actively expand their workforce, and the resilience of the labor market is shifting from strong demand to support from the existing stock.

After the nonfarm payrolls release, the market quickly lowered expectations for an October rate hike, and the policy focus shifted further from "whether to raise rates in October" to "whether another rate hike is still needed by year-end." This raises the importance of the upcoming FOMC minutes, ISM services, and subsequent inflation data; if the cooling in employment continues, the Federal Reserve will have more room to wait, but services prices and energy costs may still limit the extent of any policy shift. In particular, the G7 announced the release of up to 100 million barrels of crude oil and diesel reserves over the next four months, and the United States also abandoned its diesel export ban, which helps ease the short-term energy supply shock but does not change the underlying environment in which supply from the Middle East and Russia remains disrupted.

Therefore, what truly deserves attention now is not a single nonfarm payrolls figure, but whether "cooling employment" can align with "cooling inflation." If the two move in the same direction, the need for further Fed rate hikes will decline; conversely, if energy and services prices push inflation higher again, policy may remain restrictive even if employment is weak. For the fourth quarter, the tug-of-war among rate expectations, long-end U.S. Treasury yields, and energy prices will become an important variable affecting the valuation of the dollar, equities, and crypto assets.