Skip to content

FOMO takes over as April’s ‘Nonfarm Payrolls’ data favor interest rate cut

FOMO takes over as April’s 'Nonfarm Payrolls' data favor interest rate cut

The United States reported 175,000 Nonfarm Payrolls in April, highlighting a drastic drop from the previous month — hinting at a possible interest rate cut. Moreover, the data came far below the market’s forecasts, causing a positive surprise for risk-on assets like stocks and cryptocurrencies and an immediate reaction.

In April, Nonfarm Payrolls fell significantly short of expectations, with a reported 175,000 jobs added compared to the anticipated 238,000. This figure represents a nearly 45% decrease from March’s robust 315,000.

Meanwhile, the unemployment rate was at 3.9% in April, 10 basis points (bps) above expectations and last month’s data.

United States economic data: Nonfarm Payrolls and Unemployment Rate. Source: Investing

Unexpected Nonfarm Payrolls data and interest rate cuts

This unexpected drop in employment growth has sparked a wave of fear of missing out (FOMO) among investors, who now anticipate a favorable shift towards interest rate cuts.

Federal Reserve Chairman Jerome Powell has previously hinted that surprising labor data, such as the Nonfarm Payrolls report, could influence the Fed’s decisions regarding interest rates. Despite the Fed’s belief that the U.S. is still far from reaching its 2% inflation target, the recent jobs report has fueled speculation that the financial authority might be inclined to cut rates.

A bearish counterpoint with a hawkish Fed

However, it is worth noting that the Federal Reserve has maintained a hawkish stance on interest rates. Thus, suggesting that they could remain at higher levels for longer than initially expected in 2024. This stance is driven by the ongoing challenge of achieving the 2% inflation target.

Finance expert and commentator Financelot highlighted this bearish instance by sharing 60 seconds of Powell’s speech on May 1 in a post on X.

The question remains whether the situation will change in light of the April jobs report. The significant deviation from expectations and the subsequent market reaction suggest that investors are betting on a shift toward a more dovish monetary policy.

However, investors should not overlook the Federal Reserve’s commitment to its inflation target. It remains to be seen if the recent jobs data will be enough to sway the Fed’s decision-making process.

As market participants eagerly await the Federal Reserve’s next move, the FOMO surrounding potential interest rate cuts is palpable. The April Nonfarm Payrolls report has undoubtedly added fuel to the fire, but the ultimate decision will depend on a variety of factors, including inflation, economic growth, and labor market conditions.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

Best Crypto Exchange for Intermediate Traders and Investors

  • Invest in cryptocurrencies and 3,000+ other assets including stocks and precious metals.

  • 0% commission on stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.

  • Copy top-performing traders in real time, automatically.

  • eToro USA is registered with FINRA for securities trading.

30+ million Users
Securities trading offered by eToro USA Securities, Inc. (“the BD”), member of FINRA and SIPC. Cryptocurrency offered by eToro USA LLC (“the MSB”) (NMLS: 1769299) and is not FDIC or SIPC insured. Investing involves risk, and content is provided for educational purposes only, does not imply a recommendation, and is not a guarantee of future performance. Finbold.com is not an affiliate and may be compensated if you access certain products or services offered by the MSB and/or the BD

Read Next:

Finance Digest

By subscribing you agree with Finbold T&C’s & Privacy Policy

Related posts

Sign Up

or

By submitting my information, I agree to the Privacy Policy and Terms of Service.

Already have an account? Sign In

Services

IMPORTANT NOTICE

Finbold is a news and information website. This Site may contain sponsored content, advertisements, and third-party materials, for which Finbold expressly disclaims any liability.

RISK WARNING: Cryptocurrencies are high-risk investments and you should not expect to be protected if something goes wrong. Don’t invest unless you’re prepared to lose all the money you invest. (Click here to learn more about cryptocurrency risks.)

By accessing this Site, you acknowledge that you understand these risks and that Finbold bears no responsibility for any losses, damages, or consequences resulting from your use of the Site or reliance on its content. Click here to learn more.