US Non-Farm Payrolls Report Set to Seal Deal on October Rate Hike

The US non-farm payrolls report for September is set to be released on Friday, and market expectations are for a reading of 98k. The unemployment rate is expected to remain steady at 4.1%, while average hourly earnings are forecast to rise to a 3.2% annual rate.

In the lead-up to this meeting, there has been extreme volatility in the Treasury market and a mixed performance for stocks. Expectations of a Federal Reserve interest rate hike on consecutive meetings have also declined, with a 24% chance now predicted, down from over 70% just last week.

The jobs report is seen as a referendum on whether the Fed should continue to raise interest rates, particularly after the weaker core PCE report for August triggered a recalibration of expectations. Employers are reportedly in wait-and-see mode due to high energy costs and Fed rate hikes eating into profits.

However, some analysts think that payrolls could surprise on the downside, citing the 162k reading for August as potentially being down to seasonal factors. The focus may shift to wage data if this happens, which could be harder for the Fed to ignore.