U.S. Jobs Shock Fuels Bets on October Fed Rate Hold
With the U.S. labor market slowing far more sharply than anticipated, expectations are growing that the Federal Reserve could keep interest rates unchanged at its October policy meeting.The U.S. economy added just 29,000 nonfarm jobs in September, well below the 90,000 increase expected by economist
The U.S. labor market's unexpectedly sharp slowdown has sparked speculation that the Federal Reserve may maintain interest rates steady during its upcoming October policy meeting. September saw only 29,000 nonfarm jobs created, a far cry from the 90,000 economists anticipated. The unemployment rate climbed to 4.2% from 4.1%, and revisions showed that job growth for the prior two months dropped by a combined 60,000.
This disappointing employment data bolstered the notion that the Fed might pause its rate-hike trajectory at the Oct. 28 meeting. With CME FedWatch placing the likelihood of the federal funds rate staying at 3.75%-4.00% at 77.9% as of Oct. 5, a rate hold is now the primary market prediction. The Fed's own officials signaled a wait-and-see approach, with New York Fed President John Williams stating there was "no need for urgency" in tweaking policy and Fed Vice Chair Philip Jefferson suggesting future decisions should be based on data trends, the economic outlook, and risk balance.
Subsequently, market expectations for an October rate hike have plummeted, with the probability of at least a 25-basis-point increase dropping to around 23%, down from 64% a week earlier. Goldman Sachs economists also believe an October hike is unlikely, describing recent Fed comments as a clear indication that policymakers are ready to wait for more data.
U.S. stocks reacted positively to the jobs report, with the Dow Jones up 0.49%, the S&P 500 0.74%, and the Nasdaq Composite rising 1.19%. Tech stocks, including Nvidia, surged, pushing the Nasdaq to a record high. Nike, however, faced a dip after reporting ongoing sales struggles in China, where its sales declined by 26%. The U.S. Treasury market continues to be a critical factor for investors, as the 10-year Treasury yield remains high despite the reduced rate hike expectations, underscoring ongoing inflation worries and heavy selling in longer-term bonds.
Investors will remain uncertain until the October FOMC meeting, with inflation data, energy prices, and Treasury yields under close scrutiny. The weak labor market has lessened the immediate need for another rate hike, but persistent inflation may still prompt further tightening by the Fed later in the year.
Written by urgent.news from BusinessKorea's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
