Jobs report fails to boost Fed rate hike odds, analysts say

The US economy added 162,000 jobs in August, nearly tripling the consensus forecast of 56,000 to 65,000. On any other timeline, that kind of beat would have markets pricing in a rate hike with near certainty. This time, analysts say the number barely moved the needle on what the Federal Reserve will actually do at its September 15-16 meeting. The unemployment rate held steady at 4.1%, painting a picture of a labor market that’s resilient but not overheating. And that distinction matters, because Fed Chair Kevin Warsh has made it clear he’s watching inflation, not jobs, when it comes to the next policy decision. A strong number with a weak signal Rate-hike odds did tick higher after the report. Markets moved from roughly 49-55% probability of a September hike to approximately 58-60%. That’s a shift, but it’s not conviction. For context, the Fed’s current target range sits at 3.50%-3.75% following the July FOMC meeting. The July jobs report had shown a 23,000 decline in payrolls, a number that temporarily cratered hike expectations. August’s snapback essentially reversed that pessimism without replacing it with optimism. Treasury yields climbed in the immediate aftermath, which is th...