Barclays and BNP expect Fed rate hike in December after jobs data
The rebound in hourly earnings reverses September's calendar quirk - when the 15th falls outside the survey week, the earnings of people paid semi-monthly are under-recorded - but the key point here is that the y/y rate has risen to 2.5%, the highest since July 09 and a break to the upside from the 2 to 2-1/4% range for the first time since the crash. The Fed's hawks will now argue that they have hard evidence in the most widely-watched (but least reliable, not that it matters right now) data that the tightness of the labor market is pushing wage gains higher. Barring a disaster in November, rates are going to rise in December. - Pantheon Macroeconomics
"The October Employment Report is strong from virtually every angle, confirming further improvement in labor markets and solid economic growth in 2015Q4, and it provides vital support for a Fed rate increase in December. The very cautious Fed has been looking for economic support to raise rates. This report provides such support. Moreover, the markets’ response to the strong employment report of pricing in a December rate hike reduces any chance that a Fed move will “surprise” markets, another factor the Fed will consider. Finally." - Berenberg Capital Markets
We are moving the Fed call to a December rate hike. he U3 unemployment rate moved lower to 5.0% (September: 5.1%), as household employment also jumped following a large decline last month. The broader U6 underemployment rate, which includes part-time workers, declined two-tenths, to 9.8%, as the number of workers who are part time for economic reasons dropped sharply for the second month in a row, its fourth large decline in the past five months. - Barclays
The broad-based strength of the US employment report for October has prompted a significant reassessment of the prospects for monetary policy in the US over the next few years, putting upward pressure on Treasury yields in the process. Friday’s moves support our view that the dollar/euro exchange rate will fall from around 1.07 now to 1.05 by the end of this year and to parity by the end of next year. - Capital Economics
This reinforces the case for a rate rise in December, which Fed Chair Janet Yellen has said is a “live” meeting, meaning that a rate rise is on the table. If we do see a rates “lift off”, which is not certain as there is still another month of data to come, we would expect it to be accompanied by a dovish statement. The balance of inflationary risks has tilted a little towards higher inflation, but with current inflation close to zero, wages only rising modestly and the rise in the US dollar doing some of the Fed’s work for them, there is little need to tighten aggressively." - Schroders
The upside surprise in non-farm payrolls gave a clear signal that the disappointing August-September employment gains were likely just a blip. We think this significantly increases the odds of a December rate hike and have shifted our expectations for the timing of liftoff to December (previously March). - BNP Paribas
The implications from an employment report for the monetary policy outlook have hardly ever been more straightforward: The Fed had signaled in recent weeks that it wants to raise rates in December, unless it faces any unexpected negative shock. Today’s report was quite the opposite. The sharp rebound in employment gains, coupled with several other strong details thus gives the green light for a first rate hike in December. - Unicredit
Today's labour market report was very strong and, therefore, we now expect the Fed to deliver a 25bp rate hike at the December meeting. The market now prices close to 85% probability of a hike in December, depending on the level of Fed funds after the first hike and, in all senses, close to as much as the market can price it ahead of the December meeting. We look for four further hikes in 2016. The market has priced slightly below three hikes in total before end-2016. - Danske Bank