Fed Takes October Rate Hike Off Table, But December Still Looms Large

The Federal Reserve may have taken October's interest rate hike off the table following a weak jobs report, but December is still very much in play. The Labor Department reported that employers added just 29,000 jobs in September, far below the expected 90,000. This led to traders cutting the odds of an October rate hike to about one in four.

The Fed had already been hinting at a more cautious approach, with Vice Chair Philip Jefferson and New York Fed President John Williams suggesting they wanted more data before making a decision. Goldman Sachs had even moved its own hike forecast to December just a day earlier.

Despite the weak hiring numbers, inflation remains a concern. The manufacturing prices-paid gauge jumped to 77.9 in September, and the core Personal Consumption Expenditures (PCE) price index has risen every month for the past year.

The next few weeks will be crucial in determining whether December's rate hike is locked in. A sustained move back above $100 in oil prices could all but guarantee another increase.