The September jobs report gave markets a reason to smile and a reason to squint. Payrolls rose by 119,000, more than double what economists expected. At the same time, the unemployment rate nudged up to 4.4 percent instead of staying put at 4.3 percent.
That surprise shift pushed traders to rethink December. Event contracts now show about a 65 percent chance the Fed holds rates steady next month, down from roughly 75 percent before the report. The data did not flip the script, but it did make a rate cut feel a little less far-fetched.
Revisions told their own story. Job growth from the previous two months was trimmed by 33,000. And earlier in the week, markets saw the odds of a December move fall after the Bureau of Labor Statistics said November’s updated jobs numbers will not arrive until December 16. That is after the Fed’s final meeting of the year, which leaves policymakers flying with fewer instruments than usual.
Powell hinted at this problem during the October press conference. He said the lack of fresh data could encourage more caution, and he warned that a December cut was far from guaranteed. Several officials have backed that message. Boston Fed President Susan Collins and Kansas City President Jeffrey Schmid have signaled they are unlikely to support another cut. Governors Chris Waller and Stephen Miran want one. Others have not committed either way.
Minutes from the last meeting made the divide clear. Many Fed officials thought keeping rates unchanged through the end of the year would likely be the right call. The latest jobs report did not settle anything, but it did give both sides new talking points as December gets closer.