The Jobs report for October revealed that the U.S. added 150,000 jobs, falling short of economist expectations for 180,000 and down from September’s 297,000. Additionally, the unemployment rate rose to 3.9%, higher than the forecasted 3.8% and September’s 3.8%. This disappointing data led to downward revisions in job gains for August and September, totaling 101,000. Despite the less than favorable figures, Bitcoin (BTC) remained lower at $34,300.
Average Hourly Earnings in October
Delving deeper into the report, average hourly earnings in October were 0.2% higher, slightly below the estimated 0.3% and September’s 0.3%. On a year-over-year basis, average hourly earnings rose 4.1%, surpassing the expected 4.0% but lower than September’s 4.3%.
Shift in Sentiment in the U.S. Bond Market
Over the past two weeks, the U.S. bond market has experienced a shift in sentiment. Initially, panic selling occurred, but now there is a belief that the Federal Reserve will not raise rates further, leading investors to consider adding fixed income to their portfolios. The 10-year Treasury yield, which had reached 5% on October 19, has since fallen to 4.64% before the release of the jobs report. The two-year Treasury yield has also decreased, yielding 4.97% prior to the report.
This decline in yields has been beneficial for stocks, which have rebounded from a slump that began in late July. The S&P 500 and Nasdaq have both gained around 5% in the past few sessions. Bitcoin has also seen a recent surge, attributed to the potential approval of a spot ETF. If falling interest rates continue to boost risk assets like stocks, it is likely that bitcoin will also benefit.
Impact of the Jobs Report on U.S. Stock Index Futures
Following the release of the report, U.S. stock index futures turned positive, with the S&P 500 and Nasdaq both up by approximately 0.45%. Treasury yields further decreased, with the 10-year down by 12 basis points to 4.54% and the 2-year off 10 basis points to 4.87%. The CME FedWatch tool indicates that the odds of a rate cut as early as March 2024 have increased to 20%, compared to 13% before the release of the report.
Implications of the Jobs Report on the Economy
The Jobs report for October indicates that the U.S. economy is not recovering as quickly as economists had hoped. The lower-than-expected job gains and the rise in the unemployment rate suggest that businesses may still be struggling to find workers and fill open positions. This could potentially slow down economic growth and make it more challenging for the Federal Reserve to justify raising interest rates in the near future.
However, it is essential to note that the Jobs report is just one piece of the economic puzzle. Other factors, such as inflation and consumer spending, also play a significant role in shaping the overall health of the economy. As a result, it is crucial for investors and policymakers to consider a wide range of economic indicators when making decisions.
Conclusion
In conclusion, the October Jobs report highlights the challenges that the U.S. economy still faces in its recovery from the pandemic. The lower-than-expected job gains and rising unemployment rate indicate that there is still work to be done to get the economy back on track. However, the recent shift in sentiment in the bond market and the positive impact on stock index futures suggest that there is still optimism about the future of the U.S. economy. As investors and policymakers continue to monitor economic indicators, it will be essential to keep an eye on the ongoing developments in the labor market and their potential implications for the broader economy.
