243: Market take: How a Softening Labor Market Shapes the Fed’s Next Move

Dec 12, 2025

Nicholas Fawcett, a Senior Economist at the BlackRock Investment Institute, dives into the softening U.S. labor market and its implications for the Federal Reserve. He explains the 'no hiring, no firing' trend emerging from cooling labor demand and supply, hinting at a likely rate cut. Delayed payroll data complicates economic visibility, yet markets are pricing in a quarter-point cut. Fawcett also discusses how fiscal tightening in the UK influences bond valuations and the delicate balance between inflation control and economic stability.

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INSIGHT

Softening Labor Market Raises Cut Odds

The U.S. labor market is softening, which supports another Fed rate cut next week.
Slowing hiring and reduced migration have lowered the payroll gain needed to keep unemployment steady.

INSIGHT

Data Delays Cloud Fed's View

Delayed jobs data from the government shutdown creates noise and complicates Fed visibility.
October and November reports may be noisy and arrive after the Fed meeting on December 10th.

INSIGHT

Market Pricing Matches BlackRock View

Markets are pricing a quarter-point cut and BlackRock agrees a softening labor market justifies further easing.
That path reduces immediate independence concerns despite inflation being above target.

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As The Bid takes a short break for the holidays, we’re introducing listeners to Market Take, the weekly macro podcast from the BlackRock Investment Institute. Market Take offers fast, digestible insights on what’s moving markets - and this week, the focus is squarely on the labor market.

Senior Economist Nicholas Fawcett breaks down why softer U.S. labor data is reinforcing expectations for another potential Federal Reserve rate cut. With hiring and labor supply both cooling, policymakers are watching these trends closely as they navigate the balance between inflation control and economic resilience. Nicholas also explores how delayed jobs data complicates the Fed’s visibility into the economy, what markets are pricing in ahead of the December meeting, and how fiscal dynamics in the UK are shaping long-term bond views.

Whether you’re tracking monetary policy, macro signals, or broader capital markets trends, this short episode offers a concise view of the forces shaping the economic backdrop.

Key Insights

· The U.S. labor market is softening, raising the likelihood of another Fed rate cut.

· Payrolls show a “no hiring, no firing” pattern as labor demand and supply slow.

· Delayed jobs data may create noise, but markets still expect a quarter-point cut.

· Fiscal tightening in the UK influences gilt valuations and long-term yield dynamics.

· Labor market trends, inflation, and rates continue to guide broader market sentiment

labor market, inflation, interest rates, Federal Reserve, capital markets, macro trends, market commentary, economic outlook

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