On Friday, the U.S. nonfarm payroll report for September showcased an unexpected increase of 336,000 jobs, leading to increased speculation about a potential Federal Reserve rate hike in November. Traders responded by raising the estimated probability of a 25-basis-point rate hike to 28.6%, which triggered a significant sell-off in Treasurys. This resulted in the 2-year rate surpassing 5%, and its longer-term counterparts reaching more than 16-year highs.
Despite the growing anticipation of a hike, Goldman Sachs (NYSE:GS) maintains that the central bank has concluded its rate-hike campaign. The upcoming consumer price index is predicted to be a pivotal factor in any decision making. A further quarter-point rate hike would elevate the Fed’s primary interest-rate target to between 5.5% and 5.75%.
Following the aggressive sell-off in Treasurys, all three major U.S. indexes experienced an uptick. The market now eagerly awaits further indicators that could shed light on the Fed's future monetary policy direction.
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