The employment revision, which the markets were eagerly awaiting, was announced today with a half-hour delay. The estimates of Goldman Sachs and Wells Fargo, the leading banking institutions in the US, were that the downward revision would be between 600 thousand and 1 million. The Ministry of Labour reported this figure as 818 thousand. Accordingly, it turned out that 818 thousand fewer jobs were created in the 12 months to March 2024 than previously announced. Thus, this was the largest downward revision since 2009.

The latest data showed that the labour market is not as strong as the Bureau of Labour Statistics, which is affiliated to the Ministry of Labour. Therefore, it put more pressure on the Fed to cut interest rates. ‘Investors should expect the Fed to prepare markets for a rate cut in September,’ said Jeffrey Roach, chief economist at LPL Financial.

Navy Federal Credit Union corporate economist Robert Frick commented, ‘The revisions are not shocking, but this puts additional pressure on the Fed to cut rates.’
With today’s data, positions that the Fed will cut interest rates next month have increased. Investors expect interest rates to be cut by 25 basis points next month. On the other hand, the possibility of a 50 basis point cut has also increased. Markets started to price the probability of this scenario as 30%.

Eyes are now turned to Fed chairman Jerome Powell’s speech in Jackson Hole on Friday.