Karl Schamotta, chief market strategist at Kobeissi, noted that a sharp slowdown in US job creation in September has strengthened market expectations that the Federal Reserve will pause its monetary tightening in October. As traders price in a slower pace of rate hikes over the coming months, the dollar has fallen and US Treasury yields have declined, mainly in the short end of the curve. According to Schamotta, market moves remain limited at this stage because of an asymmetry in the Fed's reaction function. The breakeven level for employment is seen at about 50,000 jobs a month, and for Fed officials inflation is by far the bigger concern.
Weak September jobs report strengthens expectations the Fed will pause tightening, pushing Treasury yields lower, mainly at the short end.
