October Rate Hike Odds Plummet After Weak Jobs Report
A weaker-than-expected September jobs report has significantly reduced traders' expectations for a Federal Reserve rate hike in October. According to CME's FedWatch tool, which tracks trading in 30-day interest rate futures, there is now only a 17% chance that the Fed will raise rates by a quarter percentage point in October. This represents a significant decrease from just one week ago, when odds stood at close to 36%. The prediction market platform Kalshi also shows chances for a hike in October at just 18%, down from almost 70% a week ago.
The jobs report showed that the US labor market faltered in September, with only 29,000 new jobs created and an unemployment rate rising to 4.2%. This weaker-than-expected data follows a softer-than-expected inflation report released on Wednesday, which has also contributed to the reduced expectations for a rate hike.
Despite the reduced chances of a rate hike in October, investors still believe that the Fed will raise rates again in December.