Weak US Jobs Data Cools Expectations of Another Fed Rate Hike

Weak US Jobs Data Cools Expectations of Another Fed Rate Hike

The American economy added far fewer jobs than expected in September. Hiring slowed sharply, and the weak numbers have cooled market bets on another interest rate hike by the Federal Reserve.

Nonfarm payrolls rose by just 29,000 last month. That was well below the 90,000 that economists had forecast. To make matters worse, the August figure was revised down to 133,000 from an earlier estimate of 162,000.

The unemployment rate ticked up from 4.1 percent to 4.2 percent.

The weak report changed what markets expect from the central bank. Traders now see an 80 percent chance that the Fed will leave interest rates unchanged at its October meeting, up from 74 percent before the data was released. Pricing for a quarter-point hike in October fell sharply after the numbers came out.

The jobs data also pushed US Treasury yields lower and supported stock prices. American equities rallied into Friday, with technology and smaller-company shares gaining the most. The dollar lost some ground as traders unwound their bets on near-term rate hikes.

The 10-year Treasury yield first dropped to 5.16 percent after the report, then climbed back to about 5.28 percent. That is still far above the 4.42 percent seen at the end of June, a sign that bond markets remain nervous about inflation.

Still, risks remain. Higher oil prices continue to feed inflation worries. Brent crude is trading above $100 a barrel, and the US 10-year Treasury yield sits around 5.28 percent, far above the 4.42 percent seen at the end of June.

Investors will now watch the University of Michigan’s consumer sentiment survey and next week’s inflation data for more clues on the Fed’s next move.

Sources:
– https://www.reuters.com/world/middle-east/most-gulf-shares-end-higher-firmer-oil-us-rate-bets-2026-10-04/
– https://www.dailyforex.com/forex-technical-analysis/2026/10/weekly-pairs-in-focus-from-5th-to-9th-october-2026/250337