The odds of interest rate cuts at the March 18 and April 29 Federal Open Market Committee (FOMC) meetings are surging higher amid fresh signals of a weakening labor market. The CME FedWatch tool now sees a 22.7% chance of a 25 bps cut in March, up from 9.4% yesterday, and a 35.1% chance in April, up from 22.9%.
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A soft labor market supports the argument for rate cuts, as lower rates reduce borrowing costs and encourage investment and spending from both consumers and businesses.
High Layoffs and Low Openings Boost Rate Cut Odds
The Bureau of Labor Statistics announced this morning that there were 6.534 million job openings in December, missing the consensus estimate of 7.25 million and falling from 6.928 million in November. In addition, job openings reached their lowest level since 2020.
Further, data from outplacement firm Challenger, Gray & Christmas showed 108,435 job cut announcements in January, marking the highest level for the month since the Great Recession in 2009. It’s worth pointing out that UPS (UPS) and Amazon (AMZN) were responsible for 46,000 of the cuts. Challenger added that U.S.-based firms announced just 5,306 new hires in January, also the lowest since 2009.