Viewpoint: Recent employment data in the U.S. is "concerning"; the Federal Reserve has reason to consider "insurance" rate cuts next year.

On December 18, according to analysis by UBS, the employment data released this week reveals potential weakness in the U.S. labor market, which could become the basis for further rate cuts by the Federal Reserve early next year. UBS Chief Economist Paul Donovan pointed out in a report to clients that this data "rings multiple alarm bells."

Due to the government shutdown exacerbating the issue of low response rates in the Bureau of Labor Statistics survey, the quality of the data itself must be treated with caution.

Elyse Ausenbaugh, Head of Investment Strategy at Morgan Wealth Management, also agrees that the data from October is particularly "concerning." She stated that this report reinforces the market's view of the Federal Reserve's current policy path. The "insurance" rate cuts over the past few months have been a prudent move, bringing rates back to a more neutral level. She believes it may be appropriate to cut rates again in the first quarter of 2026, but the economy is currently stable, and the Federal Reserve is patient in observing subsequent actions. (Jin Shi)