On the September Jobs Report

A big beat with 254,000 net payrolls on the shoulders of large upward revisions – including to July, which last month had been sharply revised lower. It’s an even bigger beat versus the whisper number informed by the fear that the Fed’s 50 bp rate cut was because the “know something the rest of us don’t know.” The unemployment rate fell despite a large increase in the labor force to new all-time highs. This caused the Sahm Rule to untrigger itself. Employment in the “household survey” moved to new all-time highs, having been stalled out for three quarters. Market-implied expectations for Fed rate cuts came in sharply, moving close to where the Fed’s “dot plot” has been all along. It’s a positive development to trade away Fed rate cut hopes for assurance that the economy is not falling into recession.