October Jobs Surge Lifts Odds of December Hike

October's job market showed up with nearly three times the guests anyone invited. The U.S. economy added 165,000 jobs last month, against a Dow Jones forecast of 59,000, according to the Bureau of Labor Statistics as reported by CNBC ^[1].

Bond traders moved fast. The 10-year Treasury yield climbed to 4.868%, and CME Group's FedWatch tool put the odds of a December rate hike at 76.8%, up from more than 66% a day earlier ^[2][1].

How we got here

• The Fed raised rates a quarter point in September, leaving its benchmark range at 3.75% to 4.00% ^[2].
• Unemployment dipped to 4.1% and hourly pay rose 3.1% from a year earlier, both beating forecasts ^[1].
• Earlier months were revised up, with August now at 186,000 jobs and September at 60,000 ^[1].
• The 10-year yield stood at 4.9% on Nov. 4, about 0.8 point higher than a year earlier, per Treasury data ^[3].

But the report has soft spots. The average job search stretched to 27.1 weeks, the longest since September 2021, and 1.96 million people have been jobless more than 27 weeks ^[1]. CNBC's markets story also still cites September's first count of 29,000 jobs, while its jobs story uses the revised 60,000 ^[2][1].

What it means for you

Freddie Mac's 30-year fixed averaged 7.18% on Nov. 5, down 0.06 point, before Friday's jobs report hit ^[4]. By our math, that dip cut monthly principal and interest on a $300,000 loan from about $2,045 to $2,032. A rate lock freezes a quote; FWDBONDS chief economist Christopher Rupkey's forecast that "interest rates are going higher, much higher" is one view, not a guarantee ^[2].

Zoom out

The 10-year yield sits about 0.8 point above a year ago, per Treasury data, while FedWatch points to only one more hike after December ^[3][1]. Seema Shah of Principal Asset Management called the report a strong rebuttal to fears of a meaningful slowdown ^[1].