Is the Fed about to change course? Nonfarm payrolls beat expectations, and a December rate hike has suddenly become a popular option!

The most exciting thing about markets is that you should never put too much faith in yesterday’s predictions.
Just a few days ago, investors were still discussing when the Fed would cut rates; now, the release of the U.S. October nonfarm payrolls report has quickly shifted market sentiment.
The economy added 165k jobs, far above expectations of 65k. The unemployment rate fell to 4.1%, and average hourly earnings rose 0.4%. Taken together, these three figures send an important signal: the U.S. labor market remains resilient.
As a result, the market-implied probability of a 25-basis-point rate hike in December rose to 77.7%.
This caught the market somewhat off guard. After all, a rate hike means borrowing costs could continue to rise, making it more expensive for businesses to borrow and potentially increasing the burden of consumer loans.
But the Fed won’t immediately press the rate-hike button just because it sees a strong jobs report. It needs to make a comprehensive assessment of whether inflation is persistent, whether the economy is overheating, and whether financial conditions can withstand it.
The people who may feel most awkward now are those who bet on rate cuts in advance: plans can’t keep up with changing data, and wallets are even slower to keep up with the market.
The December meeting will likely become a focal point for global investors. #WCTCS9