"Wall Street is hoping for a Christmas miracle with a final interest rate cut from the Fed, bringing the base rate down to 3.5 to 3.75%, and recent jobs reports may just have sealed the deal. Investors' expectations for a cut have been on a rollercoaster in the final month of the year. Per CME's FedWatch barometer, the likelihood of a cut only a matter of weeks ago was just 50%; it now sits just shy of 90%."
"The private data showed a surprise drop of 32,000 roles in November, with the report adding that pay growth has also been on a downward trend. "Hiring has been choppy of late as employers weather cautious consumers and an uncertain macroeconomic environment," ADP's chief economist, Dr Nela Richardson wrote in the report. "And while November's slowdown was broad-based, it was led by a pullback among small businesses." Digging into the data, companies with between one and 19 employees axed 46,000 roles, while those with 20 to 49 employees cut 74,000."
Wall Street expects a final Fed interest-rate cut to 3.5–3.75% as weak recent jobs data raised the odds of easing. CME's FedWatch moved the probability from roughly 50% to just under 90% in the final month. The FOMC faces conflicting pressures: inflation sits at 3%, persistently above the 2% target, while the labor market shows strain. Unemployment remains near 4% amid a shrinking labor force driven by immigration policy changes and retirements, and job openings are fading. ADP reported a surprise private payroll decline of 32,000 in November with slowing pay growth and substantial small-business job cuts.
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