Huatai Securities: The Federal Reserve is expected to pause rate cuts from January to May, and then cut rates 1-2 times after the new chairman takes office.

A research report from Huatai Securities states that the US added 50,000 non-farm jobs in December, lower than the Bloomberg consensus forecast of 70,000, with a cumulative downward revision of 76,000 for October and November. Although the unemployment rate has declined somewhat, the significant downward revisions in the first two months have brought the three-month average of private sector non-farm payrolls down to a low of 29,000, and the structure has become further "imbalanced." Looking ahead, the report maintains its judgment that the job market will gradually improve in the future, focusing on the "temperature difference" between economic growth and employment; it expects the Fed to pause interest rate cuts from January to May, and then cut rates 1-2 times after the new Fed chairman takes office. The lower-than-expected non-farm payrolls in December were concentrated in a few sectors: the employment diffusion index showed a decline in December compared to November. Considering that most initial jobless claims have been better than expected recently, layoffs have declined, and the leading indicator NFIB (National Non-Farm Payrolls Index) continues to improve, the report still expects US non-farm payrolls to rebound. The report emphasizes the importance of monitoring the "temperature difference" between US economic growth and the job market. From the Fed's perspective, while the employment data was weak, it did not continue to deteriorate. It is expected that the Fed will pause rate cuts at its January meeting, emphasizing the need to observe subsequent data before making a decision. Therefore, it is anticipated that the Fed will pause rate cuts from January to May, and then cut rates 1-2 more times after the new Fed chairman takes office. (Jinshi)