This week, the odds of a Federal Reserve rate hike at the end of October dropped from 70% to 20%. This shift comes after comments from Fed officials, including New York Fed President John Williams and Vice Chair Philip Jefferson, indicating no current urgency for adjustments. Additionally, labor market data showed only 29,000 jobs added in September, significantly below the expected 81,000, with recent months revised down by 60,000 jobs. Despite this, the three-month average remains stable at a gain of 50,000 jobs.
Inflation metrics also contributed to the easing of rate-hike anticipation, with August’s headline PCE inflation unchanged at 3.4% year-over-year and core PCE inflation steady at 3.0%, both underestimating expectations. While the labor market appeared softer, other indicators showed resilience; real consumer spending increased by 0.6% in August, exceeding the predicted 0.5%, and the second-quarter GDP growth was revised up to 2.2%. Meanwhile, the Nasdaq-100® rose 1% this week to a new record high, despite 10-year Treasury yields climbing over 10 basis points to nearly 5.3%.
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