Following September’s surprising job numbers, economists are now reevaluating the Federal Reserve’s future actions.

The September jobs report released by the Bureau of Labor Statistics surpassed expectations, causing a significant impact on financial markets and leading economists to reconsider their interest rate predictions. Non-farm payrolls showed a surge of 336,000, almost double the anticipated number, and August’s figures were revised upwards from 187,000 to 227,000, further boosting job growth. However, unemployment and wage growth figures fell slightly short of expectations. The release of this report led to a significant increase in Treasury yields, with the 30-year Treasury yields rising above 5% for the first time since July 2007. As a result, the iShares 20+ Year Treasury ETF fell by 1.2%. This adjustment has increased the probability of another interest rate hike before the end of the year and accelerated expectations of further rate hikes into 2024. Economists have reacted to the NFPs report, with some cautioning about the potential challenges for equities in the remaining months of the year due to elevated yields. Others have emphasized the resilience of the labor market and the positive impact on consumer spending. However, concerns about a potential sell-off in both stocks and bonds have been raised, particularly as labor force participation has remained stagnant. The report’s deviation from expectations has put additional pressure on the Federal Reserve to raise rates at their upcoming meeting, leading to concerns in both the bond and stock markets.