Treasuries tumbled and the dollar strengthened as the report allayed concerns of a hiring slowdown after weaker payrolls advances cooled in August and September. Such improvement will probably mean a green light for Fed officials, who last month held out the possibility of a December rate increase.
“It’s a solid labor market,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York and a former economist at the Fed. “The report is pretty good across the board. December is now a very high likelihood for the Fed to hike rates.”
Investors have raised to about 70 percent the probability of a rate increase by policy makers’ December meeting, according to pricing in the federal funds futures market. That compares to 56 percent on Thursday, and assumes the effective funds rate averages 0.375 percent after liftoff.
The report also showed diminishing labor-market slack. The number of Americans working part-time