Fed Rate Cut Odds Surge to 97% Ahead of Jobs Data
05 September 2025
133 views
Markets are sharply pricing in a Federal Reserve rate cut, with CME Group’s FedWatch tool now assigning a 97% probability of a cut at the Fed’s upcoming meeting in two weeks. The surge in expectations comes ahead of Friday’s crucial U.S. Non-Farm Payrolls (NFP) report.
ADP Data Sets the Tone
This week’s ADP private payrolls report showed just 54,000 new jobs added in August, far below estimates. Markets took it as a “goldilocks” result — soft enough to justify easing from the Fed, but not weak enough to spark full-blown recession fears. Equities rallied on the news, with tech and rate-sensitive stocks leading the gains.
Tricky Balance for the Fed
The central bank walks a tightrope. A too-strong NFP could revive inflation concerns and derail rate-cut bets. A too-weak print could signal economic deterioration. Traders are hoping for a slowdown — but not a stall — in the labor market.
What to Watch on Friday
Consensus forecasts put headline NFP at around 130,000–140,000 jobs. A print below that range could solidify a rate cut, while anything above 180,000 might shake market confidence. Also in focus: wage growth, labor force participation, and unemployment rate changes.
Until then, rate-sensitive assets like gold, tech stocks, and Bitcoin may see continued volatility as expectations shift.
