A massive jump in US non-farm payroll numbers on Friday has seen the odds of a December rate hike by the US Federal Reserve increase sharply. The US economy added 271k jobs in October and unemployment dropped to 5% – a level that most analysts call “full employment”. The market was expecting jobs growth of 182k.
The odds of a rate hike jumped to over 70% and US 2 year Treasurys hit an intra-day high of 0.96% – the highest in 5 years.
Job numbers for August were revised up from 136k to 152k and for September revised down from 142k to 137k. Average jobs growth over the past three months is 187k. Wages growth was also particularly strong at 2.5% year-on-year. Average hourly earnings have been the missing ingredient in the employment puzzle and this number is the strongest since 2009.
