What to Watch for in the US September Jobs Report

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Transcript

00:00Stuart, what do we know already about what we're going to see today?

00:03Well, when we look at a lot of the bottoms-up data, when we look at private payrolls reports,

00:07it looks as though this is actually going to be a pretty hot report.

00:09Right now, the consensus is calling for about 50,000 jobs added during the month of September.

00:14But when we sharpen our pencils, it looks like it's going to be closer to 100,000 jobs added.

00:18That's about three times the pace of hiring needed to hold the unemployment rate steady at 4.3%.

00:24But I don't think that we're fully out of the woods yet when it comes to cooling of the labor market

00:29we still have yet to see all the federal workers who took the Doge buyout rolling off federal payrolls.

00:36After the Trump administration took office, those workers had about nine months

00:39before they would roll off and take that early buyout.

00:43We should see some of those payrolls declining, federal payrolls declining, when we get into October.

00:49But, of course, we're never going to get that October report.

00:51Exactly. It's just not going to come out because I guess the survey wasn't able to be done.

00:55The Fed knows this information right in the background.

00:58Why, then, would it feel comfortable not cutting in December?

01:03Well, it looks like there's a lot of attention being given to trying to communicate

01:08that the Fed is still committed to the 2% inflation target.

01:11When we looked at the FOMC minutes, seeing that many FOMC members as early as October

01:17were deciding that a December rate cut was not appropriate,

01:20seeing it that early really shows that this push that we've seen,

01:25this hawkish rhetoric that we've seen, has been a deliberate move to strip out pricing from December.

01:31And I think that if we were to see 100,000 jobs added during the month of September,

01:35it could even suggest that the terminal rate, this cutting cycle, is not actually close to 3%.

01:41It could be closer to 3.5%.

01:43We could get fewer cuts in 2026 than are currently being priced in.

01:48So when we see this jobs report in three hours or so,

01:51I don't think that it's really going to be December SOFR futures that are trading.

01:54It's going to be something like two years trading.

01:56Right now, the two-year rate is at 3.6%.

02:00I would not be surprised if we had 100,000 jobs then moving up to, you know, 370.