The probability of a Fed rate cut in January is low, with market expectations for a rate cut postponed to mid-year.

The research report from Guotai Haitong points out that in December, the US job market showed a state of low hiring and low layoffs, with the unemployment rate unexpectedly falling back to 4.4%, interrupting the previous upward trend. However, the growth of new jobs continues to slow down, and subsequent annual revisions may be downward. Since the unemployment rate has not risen further and the risk of a sharp slowdown in the job market remains low, the Federal Reserve still has room to pause interest rate cuts after three consecutive rate reductions. According to CME data, after the release of the non-farm payroll data, the market expects only a 5% probability of a rate cut in January. In 2026, the market expects the Federal Reserve to cut rates twice, with the timing postponed to June and September. Attention will subsequently focus on the appointment and statements of the new Federal Reserve Chair.