20/11/2025 Daily Reports
September Jobs Report Highlights: Surprising Gains, Rising Unemployment, and the Fed's Dilemma
- Job Growth Surpasses Expectations: Non-farm payrolls added 119,000 positions in September, significantly more than double Wall Street’s expectation of approximately 50,000 jobs.
- Wage Increase Noted: Average hourly earnings grew by 0.2% for the month, representing a 3.8% year-over-year rise compared to September 2024.
- Unemployment Climbing: Despite the strong job gains, overall unemployment continues to rise, hitting 4.4% in October—the highest level since October 2021.
- The Fed’s Next Move: This strong jobs report, coupled with rising unemployment, further complicates the question of whether the Federal Reserve will cut interest rates at its December meeting. Many had expected a cut, but recent FOMC minutes showed some officials already leaning against the move.
- Data Delay Impact: The government shutdown delayed this crucial report. The next report (for November) is now scheduled for Dec. 16, which is after the Fed’s key meeting.
- What’s Next?: The September jobs report is a genuine head-scratcher. Adding 119K jobs is great, and stronger wages are a plus for workers, which usually points to a healthy economy. However, the simultaneous jump in the unemployment rate to 4.4% suggests underlying weaknesses or perhaps a mismatch in job availability/skills. This mixed signal is exactly what the Fed didn’t want. If the focus is purely on the inflationary pressure from the strong payrolls and wages, they might hold rates steady. But the rising unemployment gives the “cut” advocates more ammunition.
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Yen Slide, Eurozone Soft Patch and Fed Uncertainty Create Volatile Landscape for Nikkei, DAX, Nasdaq and Gold
- The yen’s fall to around 157 per dollar, coupled with a sharp rise in Japanese government bond yields, is boosting Japan’s exporters and supporting the Nikkei 225. However, the ‘yield shock’ is also threatening popular carry trades and could tighten global liquidity, posing a risk to global equities and gold.
- In Europe, weaker-than-expected Eurozone growth and stagnant German GDP reinforce expectations that the ECB will keep interest rates on hold, widening the policy divergence with the Fed and strengthening the dollar and weakening the euro. This clouds the outlook for the DAX and could indirectly boost gold as a hedge against policy uncertainty.
- Gold is consolidating above $4,100/oz ahead of the release of the Fed minutes and US labour data, with a firmer dollar currently capping further gains.
- Overall, the risk tone in Europe is mixed, suggesting limited near-term upside for the DAX and Nasdaq. However, any equity market volatility could redirect investment into gold as a safe haven.
