China Galaxy Macro: Strong Non-Farm Payrolls Does Not Mean a Fed Rate Hike This Year

CoinFeed reported on June 7th that, according to Jinshi, a macro research report from China Galaxy Securities believes that strong non-farm payroll data does not necessarily mean the Federal Reserve will raise interest rates this year. Overall, the May labor market data indicates that the employment situation remains better than market expectations, and the Fed lacks the reasons and data to support a rate cut in the short term. However, the structure still shows no significant risk of acceleration in the labor market, nor will it push inflation into a spiral; therefore, there is no need to over-price the risk of a rate hike this year. Although the non-farm payroll data since March has been relatively strong, in the short term, it only increases the threshold for a Fed rate cut this year and will not lead to pressure for a rate hike. Overall, market concerns about rate hikes have become the main theme of trading. While China Galaxy Securities believes the market has over-priced in the risk of a rate hike, short-term lagging economic data cannot disprove the expectation of a rate hike, and the Fed can only maintain "data dependence."