Opinion: Recent US Employment Data is "Alarming", Fed Has Reason to Implement "Insurance" Rate Cut Next Year

**December 18th** UBS analysis shows this week’s jobs report hints at potential softness in the U.S. labor market—something that could lay groundwork for the Federal Reserve to cut rates further early next year. UBS Chief Economist Paul Donovan noted in a client note the data “sounded alarm bells” across multiple areas. Caution is advised when interpreting the data’s quality, as the government shutdown has worsened low response rates in the Labor Department’s survey. Morgan Wealth Management Investment Strategy Director Elyse Ausenbaugh also flagged concerns, particularly around October’s data. She said the report reinforces the market’s take on the Fed’s current policy path: the past few months’ “insurance” rate cuts were a cautious step to bring rates closer to neutral. She added a further cut in Q1 2026 may be appropriate, but for now, the economy remains stable, and the Fed is taking a patient approach to future moves. (FXStreet)