Risk Markets Decline as NFP Comes in Almost Double Than Forecast
The Non-Farm Employment Change (NFP) came in close to double what was forecast by the market, printing at 336K (vs. 171K expected). In response the US 10-year real rate jumped 4.47% to reach a high of 2.57%, its highest level since December 2008.
This filtered through to a sell-down in risk markets with the NAS100, the index that is most sensitive to interest rates, dropping 1.35% over the next 30 minutes after the NFP release. This in turn bolstered the dollar, as it is currently the safe haven of choice. The market is coming to terms that the Federal Reserve may need to raise rates further to cool off the economy.
In effect, this data point shows that the labour market is still tight, which keeps the narrative of "higher for longer" very much alive. That the NFP beat expectations by so much raises questions about the effectiveness of the Federal Reserve's tightening of monetary policy to date.
Besides the beat, numbers were revised upwards for July and August. I.e., 119,000 more jobs were created than previously reported.
There was some respite in the average hourly earning m/m which came in at 0.2%, lower than the 0.3% m/m forecast. This was at the same pace for August and does suggest a moderation in the annual growth rate for wages.
Nevertheless, given the data, the CME FedWatch Tool has the probability of a 25bps increase at the 1 November Federal Reserve meeting at 30.6%, which is up from 20.1% yesterday.
Russell Shor
Senior Market Strategist
Russell Shor is a Senior Market Strategist at FXCM, having been promoted to the role in 2025 in recognition of his depth of insight and consistent delivery of high-impact market analysis. He originally joined FXCM in October 2017 as a Senior Market Specialist.
Russell holds an Honours Degree in Economics from the University of South Africa, is a certified FMVA®, and a full member of the Society of Technical Analysts (UK). With over 20 years of experience in financial markets, his work is renowned for its clarity, precision, and strategic value across asset classes.
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