U.S. December employment data shows clear signs of weakening. The number of new jobs added was only 50,000, not only far below the market expectation of 73,000 but also less than the revised 56,000 from the previous month. Meanwhile, the unemployment rate fell to 4.4%, slightly better than the expected 4.5%, but the significance of this figure is questionable.

What is more concerning is the revision of historical data. The employment figures for October and November were collectively revised downward by 76,000, indicating that the previously strong employment scene may have been overestimated. Looking at a longer timeline, the average monthly employment growth over the first 12 months of this year was only 4,900, directly halving from 16,800 last year. Dropping from 16,800 to 4,900, this gap is quite substantial.

A softening labor market often changes market expectations for subsequent liquidity, which has a profound impact on the performance of risk assets.