Jobs in the Hot Seat

November 20, 2025

Elias Haddad

Big dollar energy faces critical jobs test. AI exuberance boosts stocks.

Japan turns on the fiscal tap. JGBs plunge. BOJ board member delivers hawkish guidance. But talk is cheap.

South African Reserve Bank is expected to cut rates 25bps to 6.75%.

USD has powered above its 200-day moving average as Fed funds futures slashed rate cut bets. The US employment data void and hawkish FOMC October meeting minutes led markets to reduce odds of a December 25bps rate cut by more than 15pts to as low as 27%. In parallel, Nvidia’s blowout revenue is boosting stocks and pouring more fuel on the AI-driven exuberance.

Yesterday, the US Bureau of Labor Statistics (BLS) confirmed the cancellation of the October non-farm payrolls (NFP) report and delayed the November NFP print to December 16, which is after the December 10 FOMC policy decision. That means the September NFP data (1:30pm London, 8:30am New York) and October JOLTS release on December 9 carry extra weight - they’re the Fed’s only major jobs check before showtime.

NFP is expected at 51k vs. 22k in August, consistent with the breakeven pace of job gains (between 30k and 50k) required for keeping the unemployment rate steady. The unemployment and participation rates are seen unchanged at 4.3% and 62.3%, respectively. For reference, ADP private employment fell -29k in September while Revelio labs non-farm employment (private and public) rose 33k.

The decline in the hiring rate suggests labor demand is weak and points to downside risk to today’s NFP print. Softer than expected September job gains will trigger a swift USD pullback and weigh on the short end of the Treasury yield curve. However, solid jobs gains in September will give the USD’s upswing a stronger fundamental anchor.

Other US data due today: weekly jobless claims, November Philadelphia Fed business outlook survey, October existing home sales, and November Kansas City Fed manufacturing index. Fed speakers: Hammack (2026 voter), Barr, Cook, Miran, Goolsbee (2025 voter), and Paulson (2026 voter).

The FOMC October 28-29 meeting minutes indicates that the bar for a December rate cut is high. “Several participants assessed that a further lowering of the target range for the federal funds rate could well be appropriate in December…[But] Many participants suggested that…it would likely be appropriate to keep the target range unchanged for the rest of the year.” Many is a greater number than several.

JAPAN

USD/JPY rallied close to 158.00, its highest level since January 15, driven by broad USD strength and the continued sell off in JGBs. Long-term JGBs yields are breaking higher on concerns over fiscal profligacy. Japan’s Prime Minister Takaichi is expected to unveil a fresh package of economic measures worth ¥17.7 trillion (2.8% of GDP). That is more than last year's ¥13.9 trillion (2.2% of GDP) supplementary budget and implies additional JGB issuance are in the pipeline.

JPY largely ignored hawkish comments by Bank of Japan (BOJ) board member Junko Koeda. Koeda said “Given that real interest rates are currently at significantly low levels, I believe that the Bank needs to proceed with interest rate normalization.” The swaps market implies just 20% odds of a rate hike at the next December 19 meeting, with a full 25bps rate increase priced for March/April. Japan’s October CPI data will help shape near-term BOJ rate expectations (11:50pm London, 6:50pm New York).

CHINA

USD/CNH is trading near the middle of a multi-month range between 7.0850 and 7.1500. China’s commercial banks left the 1 and 5-year loan prime rates unchanged for a sixth month at 3.00% and 3.50%, respectively. That was to be expected given that the PBOC has held the policy-relevant 7-day reverse repo rate at 1.40% since the 10bps cut in May.

Meanwhile, according to Bloomberg News, China is considering new measures to support its struggling property market. The measures include offering mortgage subsidies for new homebuyers nationwide, raising income-tax rebates for mortgage borrowers, and lowering home transaction costs. However, previous support measures have done little to lift a housing market burdened by a supply glut.

SOUTH AFRICA

South African Reserve Bank (SARB) is expected to cut rates 25bps to 6.75% (1:00pm London, 8:00am New York). Core CPI is settling around the bank’s new inflation target of 3% (with a +/-1% tolerance band) and South Africa’s fiscal trajectory is improving. The swaps market fully price in 50bps of cuts in the next twelve months and the policy rate to bottom at 6.50%.

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