The US Added 165,000 Jobs in October, Nearly Triple Forecasts, and Traders Now Put a December Fed Hike at 77%

The US labor market is not cooling. Employers added 165,000 jobs in October, nearly triple the 59,000 economists expected, and the unemployment rate slipped to 4.1% from 4.2%. Bond traders answered by pushing Treasury yields up and betting harder on another Federal Reserve rate hike.

The Bureau of Labor Statistics report came after a weak September that had given the Fed cover to hold. That month's first print of 29,000 jobs has since been revised up to 60,000, and August was lifted to 186,000. Together the revisions added 84,000 jobs, so the soft patch looks a lot smaller than it did a month ago.

Rates traders react

Fed funds futures put the odds of a quarter point hike at the December 9 meeting at more than 77%, up from more than 66% the day before, according to the CME FedWatch tool. Rates currently sit at 3.75% to 4.00% after September's increase. Another move would lift the range to 4.00% to 4.25%.

Yields moved with those odds. The 10-year Treasury rose to about 4.86%, the 30-year to about 5.26% and the 2-year to about 4.52%.

Chris Rupkey, chief economist at FWDBONDS, said the data makes the Fed's inflation fight harder and expects rates to go higher.

A strange week to be a stock

The jobs data landed in the middle of a brutal week for US stocks. On Thursday the Nasdaq fell 5.5% and the S&P 500 lost 4.4%, the worst one-day losses since April 2025, as investors worried that Democratic midterm wins could slow data center construction. The Magnificent Seven alone lost more than $1 trillion in market value that day.

Friday brought a partial rebound. The Nasdaq rose 1.09% to 24,579.42 and the S&P 500 gained 0.31% to 7,376.86, while the Dow slipped 0.46% to 51,285.73. All three still finished the week lower.

The October number does not fix the problem for equities. A hot labor market keeps rate hikes on the table just as AI valuations are being questioned, and traders now have a clean date to watch. Our look at September's jobs miss shows how fast that story has flipped.

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