Half-point Fed rate cut this month now in play
A half-point interest rate cut is now on the table from the Federal Reserve this month after another stark sign that the US labour market is faltering, predicts the CEO of one of the world’s largest independent financial advisory and asset management organisations.
Private sector hiring came in far weaker than expected in August, according to the ADP National Employment Report out Friday.
Companies added just 54,000 jobs, well short of the 75,000 forecast and down sharply from July’s upwardly revised 106,000.
Combined with the latest government data showing overall job growth at only 75,000, unemployment rising to 4.3%, and wage growth slowing to 3.7%, the evidence points to a labour market losing steam at an accelerating pace.
Nigel Green, chief executive of deVere Group, says: “This is a significant warning sign.
“The jobs engine of the world’s largest economy is sputtering. The Fed can no longer afford to nibble at the edges with quarter-point cuts. A 50-basis-point move is, we believe, now not only on the table but necessary.”
Until now, markets had fully priced in a 25bp cut at the September 16–17 meeting. But the combination of weak private sector hiring, a fourth consecutive month of payroll gains below 100,000, rising unemployment, and falling wage pressures has dramatically changed the conversation.
“The narrative is shifting,” comments Nigel Green.
“A small cut risks looking timid in the face of mounting weakness. A decisive half-point reduction would provide immediate stimulus, lift market confidence, and send a strong signal that the Fed is prepared to act to prevent a deeper downturn.”
The urgency is reinforced by a backdrop of declining job openings, which slid to around 7.2 million in July, one of the lowest levels in more than a year. Weekly jobless claims, while still within a historically normal range, have ticked higher.
At the same time, corporate layoff announcements in August surged, highlighting how fragile confidence among employers has become.
Investors are already braced for a cut, but the scale of the move will determine market reaction.
A modest reduction is largely priced in, meaning the market upside from 25bp is limited.
A bolder 50bp cut, however, would trigger a more powerful repricing across asset classes.
“Investors need to recognize what’s at stake here,” says Nigel Green.
“A half-point cut would weaken the dollar further, boosting US equities, particularly tech and growth names that thrive in lower-rate environments.
“It would also channel renewed liquidity into emerging markets, where valuations remain compelling.
“Meanwhile, gold and Bitcoin would likely extend gains as investors seek hedges against currency volatility and longer-term inflation risk.”
The international context matters too.
With other central banks such as the European Central Bank and the Bank of England also preparing to ease, a Fed move of greater magnitude could catalyse a wider global cycle of monetary support.
This would amplify the effects on capital flows, commodity prices, and risk-sensitive currencies from the Australian dollar to the Mexican peso.
“We are entering a new phase,” says the deVere CEO.
“For years, the Fed led the tightening cycle. Now it must lead the easing cycle. Hesitation carries the risk of a confidence shock. The data is pointing one way: the US labour market is deteriorating, and the Fed must respond with conviction.”
The political pressure is unmistakable. President Donald Trump has openly urged the central bank to slash rates more aggressively as growth momentum fades.
While the Fed insists it acts independently, markets are acutely aware that the White House wants to see cheaper borrowing costs quickly.
For investors, the implications are immediate. Sitting on the sidelines is no longer a safe strategy.
“Portfolios must be realigned for an environment of falling rates and a softer dollar,” concludes Nigel Green. “That means greater exposure to equities, international assets, and diversifiers such as gold and Bitcoin. The time to act is before the Fed delivers, not after.”