Slower U.S. Job Growth Eases October Fed Hike Expectations

U.S. job growth slowed in September, adding only 29,000 jobs, which is down from the previous month and less than expected.

This unexpected news has eased concerns of a Federal Reserve rate hike in October, but experts still predict a hike in December and further hikes next year.

Earl Davis, head of fixed income and money markets at BMO Global Asset Management, explained that despite the weaker-than-expected job growth, wage inflation remains under control, with wages growing 3% below expectations. This reduced likelihood of an October Fed hike is a significant development in the market outlook.

Davis also commented on the Bank of Canada's monetary policy, stating that they will likely hold rates steady through 2026 and may introduce hikes in 2027, contingent on inflation levels. In terms of bond markets, Davis recommended favoring five-year bonds due to their attractive yields and stable coupon income.