Will 800,000 jobs "evaporate" again? Wall Street bets that Powell will cut rates by 50 basis points in September.

The U.S. Bureau of Labor Statistics (BLS) is set to release the latest annual benchmark revision of non-farm employment on September 9, with the market highly skeptical that there will again be a situation where hundreds of thousands of jobs "vanish into thin air."

This scene played out in August 2024, when the BLS revised down 818,000 jobs, directly prompting Powell to unexpectedly cut interest rates by 50 basis points in September.

Today, the market has begun to bet—if the revised data turns out to be significantly negative again, the Federal Reserve may once again abandon a "moderate rate cut" of 25 basis points and directly implement a half-point rate cut.

Last year's script review: 800,000 jobs vanished into thin air, Powell made a sudden drop of 50 basis points

(Source: ZeroHedge)

August 2024: The BLS annual revision shows that non-farm employment was overestimated by 818,000 people in the past year, marking the largest downward adjustment in over a decade.

Three weeks later: Powell announced a 50 basis point rate cut (market originally expected 25bps)

Market Interpretation: Although there are speculations about political factors, the official reason is "soft job market".

Danger Signals for 2025: Negative Revisions or Recurrences

According to the latest data from the Federal Reserve Bank of Philadelphia and the QCEW (Quarterly Census of Employment and Wages):

BLS continues to overestimate employment in the long term, especially due to the inflation caused by the Birth-Death Model.

The employment data for May and June 2024 has been historically revised down by 258,000 people.

Goldman Sachs and Standard Chartered both predict that the non-farm data released by BLS overestimates by 40,000 to 70,000 people each month.

Comprehensive estimate: The revision on September 9 may lower by 550,000 to 800,000 jobs.

Why has the "Life and Death Model" become the target of criticism?

Overly optimistic assumptions: Assuming that the jobs created by new enterprises are the same as the post-pandemic peak.

Ignoring the reality of softness: Net new jobs in companies have significantly declined.

Data Discrepancy: The gap between BDM (Business Dynamics) and QCEW administrative data has widened.

Standard Chartered's foreign exchange chief Steven Englander bluntly stated that if this part of the inflation is excluded, the actual monthly new employment in the private sector in 2024 is only 25,000 people.

The Fed's Dilemma and Market Bets

Chris Waller (Federal Reserve Governor): Currently leaning towards a 25bps rate cut in September, but if the employment data is "significantly weak," the stance could change.

Market Logic:

If the adjustment value is less than -500,000 → The probability of a 50bps rate cut skyrockets

If the correction is moderate → Maintain 25bps rate cut expectation

Potential Market Impact

How should investors respond?

Pay close attention to the BLS revised data on September 9.

Observing the response of U.S. Treasuries and the U.S. dollar index serves as a leading signal for judging the extent of interest rate cuts.

Gold and Bitcoin may become the biggest beneficiaries of hedging and liquidity release.

Short-term traders can look for arbitrage opportunities by utilizing the volatility after the correction data is released.

Conclusion

With only a few days left until September 9, the market is holding its breath in anticipation. If history repeats itself—employment data is significantly revised downwards again—Powell may once again pull off the "flash drop of 50bps" and use economic reasons rather than political factors as the official rationale. For investors, this will be one of the most important macro events in the second half of 2025, potentially altering the trajectory of global capital markets directly.