Invest11 publishers3 min readPublished
Traders push the Fed's next rate hike to December after a 29,000-job September
CME FedWatch odds of an October Fed hike fell to 14% from 70% after September payrolls rose 29,000 against 84,000 expected. Stocks and Bitcoin rallied on what futures and prediction markets price as a one-meeting delay in the Fed's hiking.
The Investor · Invest desk
What happened
- The Bureau of Labor Statistics revised the two prior months down by a combined 60,000 jobs, and unemployment rose to 4.2%.
- Prediction markets Kalshi, Polymarket and Myriad put the odds of a hold at the Fed's October 28 meeting at 80%.
- The 10-year Treasury yield fell to 5.2% and the 30-year to 5.573%, a second daily decline after both set 24-year highs on Wednesday.
- Bitcoin touched $87,229 on Bitstamp but failed to set a new multi-month high and slipped back below $86,000.
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Why it matters
- contradiction Cointelegraph's CME reading has October hike odds falling to 18% from 64%, a 46-point move against Decrypt's 56, so how big the swing looks depends on when the futures were read.
- constraint With revisions removing about twice as many jobs as September added, officials already counselling patience would struggle to defend an October hike.
- exposure Bitcoin sits about $1,200 under its September ceiling with a December hike still priced, so a firm next jobs report would land on an asset that has not broken out.
August payrolls, first published at 162,000 and ahead of forecasts, now stand at 133,000, Cointelegraph reported [5]. That cut of 29,000 equals the whole of September's gain [1]. The rest of the combined revision, about 31,000, falls on July [2]. Net the revisions against the new month and total payrolls end up 31,000 below the August level the previous estimates showed [3]. "This marks the third weakest jobs report of 2026," The Kobeissi Letter wrote on X [6].
The Fed raised its target range by a quarter point to 3.75%-4.00% on September 16, unanimously, in its first increase since 2023 [7]. Officials had started to sound less eager before the data landed. New York Fed President John Williams said Tuesday there was "no need for urgency" [8]. Vice Chair Philip Jefferson said Thursday that policymakers may need more time before deciding whether to raise rates again, according to Decrypt [9].
On Friday traders gave up on an October hike [4], and according to Decrypt a December hike is still the market's base case [11]. From here the cycle goes one of three ways: a hold in October and a hike in December, as priced; downward revisions in the next report that pull December odds down the way October's fell; or a further drop in long yields that helps risk assets whatever the Fed decides. I think the first is the most likely. One weak month and a run of cautious speeches moved the next hike back by a single meeting. The case against that view sits in the revisions. A release that takes 31,000 jobs out of the record [3] can be followed by another, and if December pricing goes the way October's did, the cycle has stalled and I have it wrong.
The bond market had been setting its own pace. Wednesday's highs in long yields came as traders looked past softer August PCE inflation data, the Fed's preferred gauge, according to Cointelegraph [13]. Even after Friday's decline, the 10-year yield sits 1.2 percentage points above the top of the Fed's range [4].
Bitcoin rose less than tech stocks. It opened at $84,824.05 and traded at $86,152.75, up 1.57% on the day [14], while the Nasdaq was up 1.8% at the Wall Street open and the S&P 500 1% [15]. Its Bitstamp peak was about $125 short of the $87,354.33 September high, the top of its range [9] [17], and Cointelegraph places a band of sell orders at $87,300 [18]. QCP Capital ties further gains to bonds. "For Bitcoin, a Treasury relief rally would provide the cleanest upside catalyst. The asset has already demonstrated resilience through a real-rate shock that pressured gold," the firm wrote [20].
What to watch
- The Fed's October 28 statement, and whether it keeps a December hike on the table.
- A daily Bitcoin close above its September high, the condition Decrypt says traders want before calling a breakout.
- Whether the 10-year yield climbs back toward Wednesday's 24-year high, which would undercut QCP Capital's Treasury-relief case.