Fed seen skipping October rate hike as job market cools
TLT•U.S. employers added 29,000 jobs last month, below economists’ 90,000 estimate, and unemployment rose to 4.2%. Rate futures priced in less than a one-in-five chance of an October Fed rate hike, down from more than one-in-four.
1. Jobs data cools
U.S. employers added 29,000 jobs last month, compared with economists’ expectation of 90,000, and August payroll gains were revised downward. The unemployment rate rose to 4.2% from 4.1%.
2. Rate expectations shift
After the jobs data, futures priced in less than a one-in-five chance of a rate hike at the Fed’s October meeting, down from more than one-in-four. Traders also reduced bets on a December hike, which remained priced at nearly 90%.
3. Fed policy outlook
The Fed raised short-term borrowing costs by a quarter of a percentage point last month. Policymakers signaled they would likely raise rates again by year-end if inflation pressures from the Iran war and other shocks persist, provided the labor market holds up.
