Latest / Markets with Megan: A Quick Financial Markets Update / 29,000 Jobs: Is the Fed Off the Hook? | S3 E171 | 10-02-26

Transcript

29,000 Jobs: Is the Fed Off the Hook? | S3 E171 | 10-02-26 · Markets with Megan: A Quick Financial Markets Update

• 0:02
  Megan Horneman: All right, we're recording.
• 0:04
  Megan Horneman: Alright, you're ready.
• 0:05
  Megan Horneman: Well, the Fed can take a big sigh of relief after that employee employment report we got this morning.
• 0:10
  Megan Horneman: It's Friday, October 2nd, and this is Markets with Megan.
• 0:13
  Megan Horneman: If you like this podcast, you can subscribe, hit the alarm bell, share with your friends, family, colleagues, anybody that you think might be interested in those headline news that you get from an economic standpoint, what it means for the markets, how it impacts the markets and your investments.
• 0:27
  Megan Horneman: Today we're here to talk about the monthly jobs report that we got this morning.
• 0:31
  Megan Horneman: The market's been waiting for this.
• 0:33
  Megan Horneman: It's the last job, big jobs report that they will get before the Fed meets at the end of this month.
• 0:38
  Megan Horneman: And the payroll report came in much weaker than anticipated.
• 0:42
  Megan Horneman: The U.S.
• 0:42
  Megan Horneman: economy added only 29,000 jobs in September.
• 0:46
  Megan Horneman: But the bigger point to this is that the prior two months were revised lower by about 60,000.
• 0:52
  Megan Horneman: We saw the weakness really concentrated here in the government jobs, temporary help, some of those areas that might be impacted by AI, so information, professional, business services.
• 1:03
  Megan Horneman: But those areas that benefit from the construction around the AI data centers, they did see increases.
• 1:10
  Megan Horneman: We saw increases in construction, manufacturing jobs.
• 1:13
  Megan Horneman: We also saw the household employment change increase, meaning that the labor force, more people were out there looking for jobs.
• 1:22
  Megan Horneman: So the labor force participation rate actually rose to a four-month high.
• 1:27
  Megan Horneman: What we also saw was on a year-over-year basis that earnings came in growing about 3%.
• 1:33
  Megan Horneman: Still pretty strong, not strong enough with the inflation picture that we have, but a little bit weaker than what was anticipated.
• 1:40
  Megan Horneman: So this is something that the Fed will look at because of wage pressures.
• 1:45
  Megan Horneman: Wage pressures can lead to inflation, inflation down the road.
• 1:49
  Megan Horneman: We did see the unemployment rate actually tick up a little bit, and that's because we did have people entering the labor force.
• 1:55
  Megan Horneman: So more people out there looking for jobs.
• 1:57
  Megan Horneman: We we saw that tick up, still very low, but it's at 4.2% versus 4.1%.
• 2:03
  Megan Horneman: What this report does is it basically gives the Fed a little bit of flexibility to not have to make any moves in October.
• 2:10
  Megan Horneman: There is still a lot of more information they'll get before that meeting, especially around inflation.
• 2:15
  Megan Horneman: But for now, this labor market report shows them that there might be, you know, at least one month that we saw some weakness.
• 2:21
  Megan Horneman: So they can maybe hold off until that December meeting to raise rates again.
• 2:25
  Megan Horneman: There's an 18% chance now that they will raise rates in October.
• 2:29
  Megan Horneman: That was, you know, as high as a 50-50 chance last week.
• 2:32
  Megan Horneman: It still is about a 73% chance that they'll raise rates in December.
• 2:37
  Megan Horneman: The market has really liked this report today.
• 2:40
  Megan Horneman: Equities are rallying quite a bit.
• 2:41
  Megan Horneman: The bond market yields are falling.
• 2:43
  Megan Horneman: We've seen the biggest impact in the short-term part of the curve, that two-year yield.
• 2:48
  Megan Horneman: That's more linked to what the expectations for the Fed funds rate is.
• 2:52
  Megan Horneman: That actually is down 18 basis points just since Monday.
• 2:55
  Megan Horneman: So we're seeing that movement there in the bond market.
• 2:58
  Megan Horneman: So we'll take that the positive in the equity side of this.
• 3:01
  Megan Horneman: And we'll be back next week with some more news.
• 3:03
  Megan Horneman: But for now, it looks like the Fed may be able to just take a sigh of relief here.
• 3:07
  Megan Horneman: Thank you.
• 3:07
  Megan Horneman: And if you want a history of our podcast, you get to marketsmaken.