No more Fed cuts under Powell, says BofA

September’s delayed payrolls were mixed: the U.S. added 119,000 jobs versus 50,000 expected, but the unemployment rate rose to 4.4% (its highest since October 2021), leaving markets cautious and the probability of a December Fed cut low. New York Fed President John Williams said he could support a near‑term cut, nudging odds slightly higher but not altering the broader expected rate path. Bank of America’s Shruti Mishra argues a significant labor‑supply shock from tighter immigration—net immigration expected to fall to ~380,000 versus a 2020–23 average of 2.1 million (roughly a 90,000/month shortfall)—will push the breakeven pace of job growth down to about 20,000/month, keep unemployment only modestly higher (peaking near 4.5%), and therefore limit scope for further Fed cuts amid sticky inflation.

Analysis

September’s delayed nonfarm payrolls were a mixed macro signal: the economy added 119,000 jobs versus 50,000 expected while the unemployment rate rose to 4.4%, its highest level since October 2021, leaving markets cautious and the probability of a December Fed cut low. New York Fed President John Williams said he could support a near-term cut, which nudged market pricing slightly dovish but did not materially alter the expected full rate path.

Bank of America economist Shruti Mishra points to a structural labor-supply shock driven by tighter immigration — net immigration forecast at ~380,000 versus a 2.1 million 2020–23 average — implying roughly a 90,000/month shortfall and a breakeven job-growth pace near 20,000/month. BofA expects unemployment to peak only modestly near 4.5% and argues this dynamic, together with sticky inflation, limits scope for further Fed easing under Chair Powell.

Market signals compiled alongside the article show mildly negative investor sentiment and a modest market-impact score (0.35), signaling cautious positioning; the piece also notes a policy discussion on allowing Nvidia H200 sales to China, a discrete catalyst for NVDA-specific risk. Near-term trading risks center on incoming payroll releases and Fed communications that can quickly reprice rate-sensitive assets and equity positioning.

Key Decisions for Investors

• Reduce duration exposure and avoid positioning that assumes multiple Fed cuts; favor cash or short-duration fixed income instruments
• Monitor incoming payroll prints, Fed speakers (particularly John Williams) and BofA immigration/labor-supply indicators as primary triggers to adjust rate-sensitive and cyclical equity exposure
• Track policy developments around Nvidia H200 China sales as a possible idiosyncratic catalyst for NVDA and consider event-driven exposure or hedges rather than adding full directional exposure