The Fed Turns Hawkish Amid Sharp U.S. Employment Decline

As the U.S. federal government remains partially shut down, official economic data — including the crucial Nonfarm Payrolls report — is still missing. This report usually plays a major role in shaping the Federal Reserve’s monetary policy.

As a result, the importance of less prominent datasets has grown, and at least one of them is flashing serious warning signs for the labor market.

The data comes from Challenger, Gray & Christmas, an outplacement firm that tracks corporate layoffs.
According to its October report, released Thursday morning, 153,074 jobs were cut last month — nearly three times more than in October 2024, marking the highest October figure since 2003.

“This comes amid the rise of AI, lower consumer and corporate spending, and higher prices — all pushing companies to tighten budgets and freeze hiring,” Challenger said.
“Those being laid off today are finding it harder to secure new jobs quickly, which could further weaken the labor market.”

Overall, the picture remains grim: more than 1 million layoffs have been announced since the start of the year — 65% higher than last year — marking the worst year-to-date total since the COVID-19 pandemic in 2020.

Hiring data was also discouraging: companies announced plans for only 372,520 new hires in October, the lowest monthly total since 2012, when Challenger began tracking these figures.

The Ball Is in the Fed’s Court

Crypto markets are still recovering from the unexpectedly hawkish tone of the Federal Reserve last week.
The central bank cut interest rates, as anticipated, but Chair Jerome Powell suggested during his press conference that markets were wrong to expect another cut in December.

Since then, other institutions have echoed that stance — with at least two officials saying they wouldn’t have cut rates at all last week if it were up to them.

While inflation remains a concern, hawkish policymakers argue that the labor market is still strong enough and doesn’t need additional monetary stimulus.
Powell also emphasized that the government shutdown and lack of fresh data mean the Fed is now “flying blind” as it tries to assess the true state of the U.S. economy.

Markets, however, are already reacting. The yield on 10-year Treasury bonds fell by six basis points to 4.10%, while market odds of a December rate cut climbed to 69% from 60% earlier in the week.

Meanwhile, Bitcoin has remained largely unchanged at around $103,000, just slightly above the panic lows recorded earlier this week.

See also: "Mastercard launches payments with traditional cards in the RLUSD stablecoin"

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