Weak US Jobs Data Throws Cold Water on October Rate Hike Bets

The US economy added just 29,000 nonfarm jobs in September, far below the 90,000 expected by markets. The unemployment rate ticked up to 4.2%, while August figures were revised down from 162,000 to 133,000.

Economists attribute the weak data to distortions in seasonal adjustment factors rather than a genuine deterioration in the labor market. They point out that this year's Labor Day holiday fell at the end of the month, which historically leads to weak September job growth.

Market expectations for an October Fed rate hike fell from 22% to 17%, with the cumulative year-end hiking premium shrinking to roughly 21 basis points. Traders no longer fully price in another rate increase this year.