�� Benchmark Revisions Expose Hidden U.S. Labor Market Weakness ��



�� Key Update:


The Bureau of Labor Statistics’ (BLS) annual revisions wiped out 911,000 jobs for the 12 months ending March 2025 – the largest downward payroll revision on record.


➡️ Average monthly job growth for the period was cut in half, revealing a much weaker economy than headline prints suggested.



⚠️ Why This Matters

Data Distortion: The BLS Birth/Death model overstated new business formation. Immigration inflows further masked the slowdown.

Policy Mistake: Fed paused rate cuts after Dec’24 based on flawed labor data → policy stayed too tight even as real momentum faltered.



�� Sahm Rule Recession Triggered (Aug ’24):

Unemployment’s 3-month avg rose >0.5pp above its 12m low → classic recession signal, months before official recognition. CES payroll data failed to capture this.



�� Markets Catching Up

Fed Funds Futures: Now pricing ≥100 bps cuts by Dec ’25.

Next Week’s Meeting: Risk of an outsized 50 bps cut.

Dollar Impact: Potential sharp USD slide if Fed signals accelerated easing.



�� Cross-Asset Implications

�� Gold/Silver: Beneficiaries of USD weakness & safe-haven flows.

⚙️ Base Metals: Liquidity + softer dollar = support for industrial demand.

�� Brics+ FX/Assets: Attractive carry, inflows likely.

���� US Assets: More volatility as policy catch-up unfolds.



�� Outlook

The Fed faces urgent pressure to ease in line with revised labor realities.

�� Aggressive cuts = reset expectations across FX, commodities & risk assets globally.



�� Takeaway:

This is a historic revision shock → Fed is behind the curve.

�� Expect weaker USD, stronger bullion, firmer base metals, resilient Brics+ assets.

⚠️ Volatility will rise — risk management is critical.


Disc: https://www.kotaksecurities.com/disclaimer/commodities - Kotak Securities