Huatai Keeps December Rate Hike as Base Case After Weak Jobs Report

Huatai Securities has revised its expectations for Federal Reserve interest rate hikes in response to the weaker-than-expected September nonfarm payroll report. According to the firm, a December hike remains its base case, but the urgency for consecutive increases is reduced in the short term.

The three-month average of new nonfarm payrolls was 51,000, near the level associated with balanced employment. This suggests that the labor market is steady but not especially tight. The unemployment rate also remained relatively low.

The NFIB hiring-intentions indicator points to potential weakness in October nonfarm payrolls, which could rebound afterward. Slower wage growth and weaker September hiring indicate slower real-income growth that month. Household consumption may not sustain August's strong performance.