Fed Rate Cut Expectations Surge as Jobs Data Weakens and Debt Burden Grows
The U.S. economy is flashing conflicting signals—cooling inflation meets softening labor markets, while equities rally. The December FOMC meeting now looms as a potential pivot point, with markets pricing in aggressive easing.
ADP’s latest payroll report delivered a jolt: a loss of 32,000 private sector jobs versus expectations of 10,000 gains. This marks the sharpest contraction since early 2023, amplifying pressure on the Fed to abandon restrictive policy.
Behind the scenes, fiscal realities are tightening the vise. Consumer balance sheets strain under high borrowing costs and dwindling real wages. Default rates creep upward. The Fed’s 2% inflation target appears increasingly secondary to preventing economic stall speed.
Market participants already position for liquidity tailwinds. Whisper numbers circulate of S&P 500 reaching 8,000—a bet predicated on swift monetary accommodation. The calculus is simple: when jobs falter, the Fed folds.
