Macro
December Fed hike odds rise to about 77% after strong October jobs report
Traders added roughly 10 points to the chance of a quarter-point increase as the 10-year Treasury yield pushed toward 4.9%.
HedgeWeekly News Desk ·
Futures markets now price about a 77% chance that the Federal Reserve raises interest rates at its December 8-9 meeting, according to CME FedWatch data cited after Friday's jobs report. Reports put the figure at roughly two-thirds before the release, a rise of about 10 percentage points.
The Fed's target range is 3.75% to 4.00% after a quarter-point increase in September and a hold at the October meeting. A December move would take it to 4.00% to 4.25%. Employers added 165,000 jobs in October against forecasts of about 65,000, and the unemployment rate stood at 4.1%.
Treasury yields rose on the data. After the report the 2-year yield was about 4.52%, up nearly 5 basis points, and the 10-year was near 4.87%, up more than 3 basis points; those are intraday readings, not closing levels. Cleveland Fed President Beth Hammack said policy needs to turn restrictive to bring inflation back to 2%, and Richmond's Thomas Barkin said the path is clear and the question is pace. New York's John Williams said inflation has been too high for too long but suggested weighing incoming data before acting.
For funds and allocators, the market has moved from debating whether the Fed hikes again to debating how fast. Officials are split on pace rather than direction, so the next inflation readings before the December meeting carry more weight than usual. Positioning in rate-sensitive assets and the AI-led equity names that sold off this week will be tested if the 10-year yield holds near these levels.