Traders Add to Fed Rate Hike Bets After 165,000 October Jobs Beat
Payrolls came in 100,000 above forecast, reviving a December hike that a Thursday equity selloff had put in doubt.
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October payrolls rose 165,000 against a 65,000 forecast, and traders added to bets on a Fed rate hike at the December meeting.
Payrolls land far above forecast
The Bureau of Labor Statistics reported that employers added 165,000 jobs in October. Economists had forecast 65,000. The highest estimate in the survey was 131,000, so the print cleared even the most optimistic call by 34,000.
September's gain was 29,000, which fell below every estimate at the time. October reverses that soft reading in one release.
Traders responded by raising bets that the Federal Reserve will hike again at its Dec. 9 meeting.
What the market priced before the print
Futures pricing showed roughly a 66% chance of a 25 basis point hike in December going into the report. That was down from earlier in the week after a sharp Thursday selloff in equities and a rally in Treasuries. Money had been moving into fixed income, and the 2-year yield had fallen as traders trimmed tightening odds.
The jobs data cuts against that move. A labor market adding 165,000 jobs gives hawks on the committee a stronger case, and strategists had flagged the risk of exactly this outcome. Sevens Report Research's Tom Essaye wrote ahead of the release that strong labor data could fuel arguments for a December hike and a second one in March.
Where the Fed stands
The Federal Open Market Committee held the federal funds target range at 3.75% to 4% on Oct. 28. That followed its first rate hike since 2023 in September. The pause left the door open, and the market has spent two weeks debating whether the committee walks through it.
The ADP private payrolls report earlier this week showed 86,000 jobs added, above the 69,000 forecast. The October job openings report also pointed to a resilient labor market. The BLS number is the third strong labor read in a row.
Stocks face the harder read
A strong jobs report is not automatically good news for equities right now. Shares had just absorbed one of the sharpest selloffs of the year, and higher hike odds push yields and discount rates the wrong way for high valuation growth names. The dollar tends to firm on this kind of data, while gold faces pressure.
Breadth is the place to check whether selling is broadening or narrowing. The [Market Breadth dashboard](/breadth) tracks participation across the index, and it will show whether Friday's session extends the damage or stabilizes it.
Inflation data decides the next move
One jobs report doesn't settle a December decision. The committee will weigh November payrolls and October inflation data before Dec. 9. Next week's CPI and PPI releases carry more weight than any single labor print.
A hot CPI on top of 165,000 jobs would make a December hike the base case. A soft one would leave the committee with a strong labor market and cooling prices, and that is the setup where hike odds slip again.
The next read comes next week, when CPI and PPI land before the open.