Kiwoom Securities "Probability of US Rate Cut in December Increases"

Next Week's Labor Market Indicators Release
Unemployment Rate Expected to Rise Slightly

Kiwoom Securities forecasted on the 28th that the probability of an interest rate cut at the U.S. Federal Open Market Committee (FOMC) meeting in December has increased again.

Yumi Kim, a researcher at Kiwoom Securities, stated, "Although the U.S. Personal Consumption Expenditures (PCE) price index for October rebounded slightly compared to the previous month, the relief that it met market expectations and the perception that the slowing trend remains valid have raised expectations for an interest rate cut at the December FOMC."

The biggest related event is the U.S. labor market indicators to be released next week. Job openings and labor turnover data, ADP private employment, and the U.S. Department of Labor's November employment report will be announced.

According to market consensus, job openings are expected to increase compared to the previous month, but ADP private employment is expected to decrease from last month. The November employment report is forecasted to show an increase in nonfarm payrolls again.

Researcher Kim predicted, "Since October's nonfarm payrolls sharply declined due to temporary effects from strikes at Boeing and hurricanes, there could be a rebound effect leading to an increase in November."

However, the unemployment rate is expected to rise slightly by 0.1 percentage points to 4.2% compared to the previous month. Kim analyzed, "If nonfarm payrolls increase but the unemployment rate continues to rise, evaluations that the labor market's slowing trend is persisting will continue, supporting the Federal Reserve's outlook for an interest rate cut in December."

She added, "Many Federal Reserve officials are scheduled to speak, and while they may express some concerns about inflation, overall, they are expected to maintain a stance favoring a gradual interest rate cut policy."