Investors Price In 83.9% Odds the Fed Holds Rates in October After Weak Jobs Data

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4▲1 ▼2Impact / 5
Summary · why it matters

Investors have raised their bets that the Federal Reserve will hold interest rates steady at its October meeting after the release of lackluster employment figures, shifting from earlier expectations of a rate hike this month. The latest FedWatch Tool from CME Group indicates that investors now assign an 83.9% probability to the Fed keeping rates at 3.75-4.00% at the October meeting, up from just 35.8% a week earlier. Meanwhile, investors assign a 16.1% probability to the Fed raising rates by 0.25% to 4.00-4.25%, down from as much as 64.2% a week earlier. The US Labor Department reported that nonfarm payrolls rose by only 29,000 in September, below analysts' forecast of 89,000. The unemployment rate rose to 4.2%, while analysts had expected it to hold steady at 4.1%. The Labor Department also revised August payrolls to an increase of 133,000, from an earlier report of 162,000. Average hourly earnings rose 3.0% in September from a year earlier, below analysts' forecast of 3.2%, and edged up 0.1% month on month, below the forecast of 0.3%.

Impact on assets 3

Carbon Removal (DAC)▲ · 1 stocks
CME Group Inc
CME
▲ PositiveDemandrelevance

CME's FedWatch Tool is the source of the rate-hold odds, driving usage of its derivatives/rate products.

Others▼ · 2 stocks
％Effective Federal Funds Rate
EFFR
▼ NegativeMonetaryrelevance

Weak jobs data and 83.9% odds of a Fed hold lower the expected policy rate path, pushing the effective fed funds rate down.

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