Fed turns hawkish as US employment index flashes red

As the federal government remains in shutdown mode, official economic statistics continue to be lacking, including the vital monthly nonfarm payrolls report, which plays a major role in informing the Federal Reserve’s monetary policy.

In this way, the status of some reports that have not received much attention has improved, and at least one report has raised serious red flags in the labor market.

That is the monthly workforce reduction report released by Challenger, Gray & Christmas, an outplacement support company. October data released Thursday morning showed 153,074 people were laid off last month. This is almost triple the number in October 2024 and the highest October record since 2003.

“This comes as the adoption of AI, softening consumer and business spending, and rising costs are driving belt-tightening and hiring freezes,” Challenger said. “The labor market may loosen further as those currently furloughed find it harder to secure new roles quickly.”

Zooming out, the picture is painted just as grim, with more than 1 million job cuts since the start of the year, a 65% increase from a year ago and the highest amount since the coronavirus panic of 2020.

October’s jobs report was similarly weak, with only 372,520 job openings planned for the month, the lowest number since Challenger began tracking the data in 2012.

The ball in the Fed’s court

Cryptocurrency markets continue to reel from last week’s hawkish surprise when the Federal Reserve (as expected) cut interest rates, but Chairman Jerome Powell suggested in a press conference that market participants made a big mistake in expecting another rate cut in December.

Since then, a number of Fed speakers have followed suit, with at least two saying that if it had been up to them, they wouldn’t have even cut rates last week.

This news is certainly one of the factors that caused the cryptocurrency to plummet along with Bitcoin over the past eight days. BTC$102,823.15 It remained below $100,000 before rebounding slightly this morning to return to $103,000.

While inflation was certainly one of the Fed’s concerns, the revitalized hawks also signaled that the job market was strong and there was no need for monetary stimulus. Powell also pointed out that the government shutdown and lack of official statistics mean central banks are acting almost blindly trying to decipher the economy.

The Fed’s reaction to today’s shocking challenger statistics will be closely watched. For now, traditional markets are not waiting. The 10-year Treasury yield fell 6 basis points to 4.10%, and market-based odds that the Fed would cut rates in December rose to 69% from 60% earlier in the week.