Citic Securities: Non-farm Break-even point down to 0, what does it mean?

The CITIC Securities research report pointed out that according to Federal Reserve research, the employment growth needed for breakeven in 2026 may drop to 0, mainly due to decreasing immigration and an aging population. The policy implications for the Federal Reserve are as follows: In the short term, if breakeven employment does indeed reach 0, although the current non-farm data is poor, as long as there is no continuous negative growth, the unemployment rate will not rise; under the impact of oil prices, this will give the Federal Reserve a longer window for waiting before cutting interest rates. In the medium term, a stable unemployment rate does not mean the economy is out of danger, nor is it the ultimate goal of the Federal Reserve; breakeven employment dropping to 0 means a significant decrease in the potential economic growth rate, a reduction in inflationary pressures, and therefore the Federal Reserve will need to pursue higher nominal growth by lowering the unemployment rate and increasing the intensity of interest rate cuts. Impact on U.S. bonds: In the short term, yields will continue to fluctuate at high levels, and there may be another round of upward pressure; however, throughout the year, as there is still a chance of interest rate cuts, maintaining a bullish stance and buying on yield rate increases may be an opportunity.