The 29,000 nonfarm jobs report isn’t the number the market should remember most—16% is.
September payrolls rose by only 29,000, below the 90,000 expected; the prior figure was revised down by 60,000, and July turned negative, while the unemployment rate climbed to 4.2%. As a result, market expectations for an October rate hike fell from nearly 70% to 16%.
More importantly, the August core PCE year-over-year came in at 3%, which is 0.3 percentage points lower than the 3.3% forecast. Employment has clearly weakened, and core inflation is also below expectations—both pillars of the tightening narrative have therefore thinned at the same time.
I don’t view this as a brief burst of “bad data.” Instead, it’s a signal that richly valued assets have regained liquidity support. When the rationale for hikes recedes, risk assets usually don’t wait for sentiment to improve before repricing.
#MARKET
September payrolls rose by only 29,000, below the 90,000 expected; the prior figure was revised down by 60,000, and July turned negative, while the unemployment rate climbed to 4.2%. As a result, market expectations for an October rate hike fell from nearly 70% to 16%.
More importantly, the August core PCE year-over-year came in at 3%, which is 0.3 percentage points lower than the 3.3% forecast. Employment has clearly weakened, and core inflation is also below expectations—both pillars of the tightening narrative have therefore thinned at the same time.
I don’t view this as a brief burst of “bad data.” Instead, it’s a signal that richly valued assets have regained liquidity support. When the rationale for hikes recedes, risk assets usually don’t wait for sentiment to improve before repricing.
#MARKET