The U.S. job market is showing signs of deceleration, according to a recent government report, leading traders to anticipate a halt in interest rate hikes and the initiation of rate cuts by the Federal Reserve as early as May. The report has resulted in futures contracts pricing that reflects less than a 20% chance of a Fed rate hike by January, a decrease from pre-report estimates of 30%.
The Labor Department reported an increase in nonfarm payrolls by 150,000 last month, marking lower-than-expected job gains for September. Concurrently, the unemployment rate edged up to 3.9% from 3.8%, and wage growth has been slower than anticipated.
Despite these trends, the Federal Reserve, under the leadership of Jerome Powell, has maintained a steady policy rate at 5.25%-5.50%. Traders believe this will be sufficient to achieve the Fed's 2% inflation target.
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