October 4, 2024 (Globalinvestorideas.com Newswire) Globalinvestorideas.com, a go-to platform for big investing ideas releases market commentary from Quasar Elizundia, expert research strategist at Pepperstone.
“Non-farm payrolls (NFP) data for September has significantly surprised to the upside, with the creation of 254,000 jobs, far exceeding the estimates of 140,000 jobs. This increase marks the largest employment growth in six months, with sectors like food services (+69K) and healthcare (+45K) leading the advance. Additionally, upward revisions in July’s (+55K) and August’s (+17K) data further boost the labor outlook, although it’s important to remember that this has historically been a sensitive issue, as these figures have shown significant variations in the past.
The unemployment rate also unexpectedly fell to 4.1%, a level that defies previous forecasts of a slowdown for the last quarter of the year, as mentioned in the Federal Reserve’s (FOMC) projections in September. This improvement in the labor market significantly reduces the likelihood of an aggressive 50 basis point rate cut in the November meeting, as just last week, the odds of such a cut were over 50%, and they have now fallen to just 7%.
Regarding the markets, the U.S. dollar has regained ground after being pressured by rate cut expectations. Likewise, Treasury bond yields have risen, with the 10-year yield increasing by 10 basis points to 3.95%, its highest level in almost two months. In this context, the Mexican peso (MXN) has also benefited, advancing against the dollar after previous fears of an economic slowdown in the U.S. had weighed on the MXN.
In conclusion, September’s NFP data supports the narrative that the U.S. labor market remains solid, significantly reducing the Federal Reserve’s urgency to implement aggressive interest rate cuts in the short term.”
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