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Market reacts after October jobs report!

October report on jobs is out!

Market reaction was timid, but optimistic as futures traders are upping their interest-rate bets after Friday morning’s jobs report showed a persistently hot labor market.

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FactSet chart on market reaction after job reports

Bettors see the federal-funds rate rising as high as 5.22% in June and not dipping below 4.2% any time over the next several years, according to FactSet.

After the central bank signaled elevated rates are likely to linger on Wednesday, futures contracts tied to the Fed’s benchmark rate shot-up.

Rates were expected to hover above 5% from April to October of next year, touching as high as 5.14%.

Odds for a scaled-back 0.50-point increase and a fifth-consecutive 0.75-point raise at the December meeting remain a toss-up.

Government bond yields climbed after Labor Department data showed that the economy added 261,000 new jobs last month, more than the 205,000 that economist had anticipated.

  • The 10-year Treasury yield rose to 4.193%, according to Tradeweb, up from 4.123% on Thursday. The two-year yield climbed to 4.774%, from 4.699% a day ago. Yields rise as bond-prices fall.

Traders are focused on how the data will influence what the Fed does next The central bank has been raising rates rapidly to cool inflation, and strong economic data like the new jobs report suggest that demand in the economy is not yet slowing as much as Fed officials might want.

source: Factset