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On Friday, September 6th local time, the United States released the August non-farm employment data, which was the last significant employment data before the Federal Reserve's September FOMC meeting. The data showed that the number of non-farm jobs increased by 142,000 in August, slightly below expectations. In addition, the unemployment rate remained at a low level of 4.2%, in line with expectations, indicating a gradual cooling of the labor market.

According to the latest data from CME's "FedWatch," the probability of the Federal Reserve cutting interest rates by 25 basis points in September is 71.0%, and the probability of a 50 basis point cut is 29.0%. The probability of the Federal Reserve cutting rates by a total of 50 basis points by November is 28.7%, by 75 basis points is 54.0%, and by 100 basis points is 17.3%.

The latest research reports from securities firms show that many institutions tend to believe that the Federal Reserve will cut interest rates by 25 basis points in September. In addition, some institutions also believe that the August inflation data is the key factor in determining the magnitude of the rate cut.

Expectations for a 25 basis point rate cut in September by the Federal Reserve are heating up.

CICC pointed out that the decline in the U.S. unemployment rate in August reflects the reversal of temporary unemployment, which is in line with expectations. However, the slowdown in the increase of non-farm jobs indicates that the demand for labor is also decreasing. The good news is that there is no significant sign of layoffs by companies, and the number of unemployment claims remains low. This means that the labor market is still stable and has not "fallen off a cliff." Looking ahead, the U.S. economy is still expected to achieve a soft landing, but the Federal Reserve must also take action. The possibility of the Federal Reserve cutting rates by 25 basis points in September is greater, and it may also increase the magnitude of the rate cut depending on the situation after that.

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CITIC Securities stated that the Federal Reserve's judgment of the U.S. employment market does not rely on a single unemployment rate. Recently, the unemployment rate has been greatly affected by the supply of labor, and the employment situation of the prime working-age population remains healthy. Federal Reserve Governor Waller stated that monetary policy decisions depend on data and is open to the scale and speed of rate cuts. The August non-farm data is still within the Fed's "comfort zone," and we expect the Fed to cut rates by 25 basis points for the first time at the September FOMC meeting, with three 25 basis point rate cuts throughout the year, and the 10-year U.S. Treasury yield is expected to operate within the range of 3.5-4.2% for the year.

GF Securities research report pointed out that on the day of the release of the U.S. August non-farm data, Federal Reserve Governor Waller and New York Fed Chairman Williams provided key guidance for future monetary policy. The overall speeches of the two are in line with the judgment of a soft landing of the U.S. economy, maintaining the judgment that the Federal Reserve will start cutting rates in September, with about two rate cuts throughout the year, each by 25 basis points.

Huaxi Securities stated that the August U.S. employment data shows a weak increase in employment, a slight decline in the unemployment rate, and a structural increase in wages. The labor market has cooled significantly and may need to accelerate the pace of rate cuts. The acceleration of wage growth is mainly structural, and its impact on inflation is relatively controllable. In this situation, the three remaining Federal Reserve meetings this year may cut rates by at least 25 basis points each time, and the overall rate cut for the year may reach at least 75 basis points.

The August U.S. inflation data may have a greater impact.

Zhongtai Securities believes that investors should pay more attention to the upcoming August inflation data, which will have a more direct impact on the September rate cut decision. Due to the frequent adjustments of non-farm data and the statements of Federal Reserve officials, the trend of inflation is the key factor in determining the magnitude of the rate cut.Open-source securities research report indicates that the market guidance significance of the August non-farm employment data is limited. On one hand, the data shows that the labor market is indeed weakening, but on the other hand, it also partially dispels market concerns about an imminent recession in the U.S. economy. Under these circumstances, the market may trade along a risk-averse path, which is also an important reason for the recent continuous adjustment of U.S. stocks. Looking ahead, before the September FOMC meeting, there is the August CPI data. If the core inflation decline is relatively limited, the possibility of a significant interest rate cut by the Federal Reserve may be smaller. However, for the market, the relevant risk assets will continue to be under pressure, U.S. Treasury yields may remain at relatively low levels, and market volatility will be amplified.