US Sept payrolls jump takes Nov 50 bp cut off the table
2024.10.04 09:24
(Reuters) – U.S. job growth accelerated in September and the unemploymentrate slipped to 4.1% from August’s 4.2%, further reducing theneed for the Federal Reserve to maintain large interest ratecuts at its remaining two meetings this year. > by 254,000 jobslast month after rising by an upwardly revised 159,000 inAugust, the Labor Department said on Friday. Economists polledby Reuters had forecast payrolls rising by 140,000 positionsafter advancing by a previously reported 142,000 in August. The initial payrolls count for August has typically beenrevised higher over the past decade. MARKET REACTION:STOCKS: E-minis extended 0.73% higherBONDS: The yield on benchmark U.S. 10-year notesrose to 3.934%, the two-year note yield rose to3.8469%FOREX: The turned 0.6% higher COMMENTS: BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT,MENOMONEE FALLS, WISCONSIN “A pleasant surprise to the upside, but mentally the Fed isshaving about 68,000 from the headline payrolls number. This isbecause the Bureau of Labor Statistics has not yet revised theirnumbers from their latest benchmarking study. August payrollsare also the ones most often revised because there are all sortsof issues with people going back to school. “Despite the large upside surprise to the payrolls number,the aggregate weekly hours worked fell 0.1%. This could bebecause of Hurricane Helene, which wreaked havoc during thesurvey week. “Unless we see a big downside surprise with the November1st report for October, the Fed will take this as a reason tocut only 25 bps.”GLEN SMITH, CHIEF INVESTMENT OFFICER, GDS WEALTH MANAGEMENT,FLOWER MOUND, TEXAS “Friday’s jobs report was stronger-than-expected and thatgives the Federal Reserve flexibility to either cut interestrates by 25 basis points at their next meeting on November 7, ortake a pause and revisit a potential rate cut in December. Itwas still the right decision for the Fed to cut rates by adeeper 50 basis points in September, which was essentially aninsurance policy for the Fed to guard against any risk of adeterioration of the labor market, which had been slowing priorto Friday’s report.” “The labor market data may become clouded over the next fewreports by a perfect storm of factors, such as the port strikeand the disruptions from Hurricane Helene. While these dataimpacts aren’t likely to change the Fed’s interest rate course,it may make it tougher for both central bankers and investors togauge accurately how the labor market is faring.” “The stock market has been living up to October’s reputationof increased volatility, and we expect this choppiness tocontinue for the next few weeks as the market starts to navigatethe uncertainty surrounding the election, the Federal Reserve’snext move and corporate earnings reports.”LINDSAY ROSNER, HEAD OF MULTI-SECTOR INVESTING, GOLDMAN SACHSASSET MANAGEMENT (in emailed note) “Today’s data hit a grand slam with payrolls coming instrong, positive revisions, and unemployment falling. Theeconomy is heading into the post-season solidly. This is a beaton every aspect and the Fed must be smiling as they got theirbats out! This is a credit positive as the fundamentals of thiseconomy are on strong footing.”
