The U.S. saw a weaker-than-expected gain in non-farm payrolls in August, with significant downward revisions to job growth in June and July, increasing the probability of a 50 basis point rate cut by the Federal Reserve in September to over 50%.

The U.S. economy's job creation in August rebounded slightly but fell short of expectations.

Although the data at first glance doesn't look too bad, the substantial reduction in the number of jobs added in July and June indicates that the labor market cooled earlier than it appears.

The U.S. seasonally adjusted non-farm employment increased by 142,000 in August, missing the expected 160,000 and marking the largest increase since June this year.

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The U.S. unemployment rate fell to 4.2% in August as expected, down from 4.3%, hitting a new low since June and marking the first decline after four consecutive months of increases.

The average hourly earnings in the U.S. in August recorded a year-over-year increase of 3.8%, higher than the expected 3.7% and the previous value of 3.6%.

After the release of the U.S. employment data, spot gold first fell then rose, with a short-term fluctuation of $15, approaching the $530 mark.

Spot silver touched $29 per ounce.

U.S. Treasury yields plunged, with the 2-year Treasury yield falling to 3.642%, the lowest since May 2023; the 10-year Treasury yield fell to 3.657%, the lowest since June 2023.

The U.S. dollar index fell nearly 60 points in the short term.

Non-U.S. currencies rose across the board, with the euro against the dollar rising 70 points in the short term, the pound against the dollar rising 90 points in the short term, the dollar against the yen falling below 142, with a daily loss of 1.02%.

The dollar against the Swiss franc hit a new low for the year.

Traders increased their bets on a 50 basis point rate cut by the Federal Reserve in September.

Interest rate futures traders estimated that the probability of a 50 basis point rate cut by the Federal Reserve in September is about 55%, while the probability of a 25 basis point rate cut is 45%.

It is worth noting that the previous value of U.S. non-farm employment growth was significantly revised downward.

The U.S. Bureau of Labor Statistics said that the non-farm employment increase in June was revised from 179,000 to 118,000; the non-farm employment increase in July was revised from 114,000 to 89,000.

After the revision, the combined number of jobs added in June and July was 86,000 less than before the revision.

In terms of unemployment, the unemployment rate in August was 4.2%, with 7.1 million unemployed.

These figures are higher than a year ago when the unemployment rate was 3.8% and the number of unemployed was 6.3 million.

Analyst Chris Anstey said that, ultimately, this report indicates that the job market will continue to cool rather than "bottom out."

Analyst Enda Curran said that it is clear that the downward revision of 86,000 jobs added in June and July is one of the biggest takeaways from today's data, as it adds to the view that the labor market is weaker than the overall data suggests.

It is not hard to imagine that there will be another revision in August.

Nevertheless, the Wall Street Journal believes that the latest non-farm report did not clearly eliminate the uncertainty of whether Federal Reserve officials will cut rates by a more traditional 25 basis points or by a larger 50 basis points.

"Fed mouthpiece" Nick Timiraos also said that he originally thought that the non-farm employment report might provide a clear signal about the first rate cut by the Federal Reserve, whether it is 25 basis points or 50 basis points, and the market pricing will immediately rise to 90%.

However, this non-farm employment report did not solve this problem well, and the market's pricing for a rate cut of 25 or 50 basis points is "fifty-fifty".

The overall non-farm data is not bad enough to make the benchmark expectation a rate cut of 50 basis points, but considering the revised data, it is not convincing enough to completely eliminate speculation about a larger rate cut.

BlackRock Senior Portfolio Manager Jeffrey Rosenberg is worried that the danger is that if the Federal Reserve eases by 50 basis points this month, it may imply concern about the economy, rather than reassuring people that policymakers are taking timely action to avoid a recession.

Analyst Kristine Aquino pointed out that although the employment data cannot fully determine whether the Federal Reserve will cut rates by 50 basis points this month, it is expected that the Federal Reserve's rate cut will be significantly increased by the end of the year.

Traders currently expect that the rate cut will exceed 111 basis points by then.

This means that if the Federal Reserve does not cut rates significantly this month, it is expected to act in November or December.

After the latest non-farm employment data was released, New York Fed Chairman Williams made a speech but did not comment on the specific rate cut.

Williams said that given the progress made in reducing inflation and cooling the job market, it is appropriate for the Federal Reserve to cut rates now.

The Federal Reserve has made "significant progress" in achieving its dual goals of maintaining price stability and full employment, and the risks to achieving these two goals have entered a "balanced" state.

He is now more confident that inflation is moving towards the central bank's 2% target on a sustained basis, and added that the labor market is unlikely to be a source of future price pressures.

Although Williams did not disclose the extent of the Federal Reserve's first rate cut, he said that officials can shift policy to neutral.

Over time, this depends on the evolution of data, prospects, and the risks to achieving the inflation target.