Nonfarm payrolls strengthen expectations of cooling employment, with the probability of the Federal Reserve holding rates steady in October rising to 83%.

The Non-Farm Payrolls data further reinforces the view that momentum in the US job market is cooling. According to CME's "FedWatch" tool, traders now estimate an 83% probability that the Federal Reserve will keep rates unchanged at its October meeting, up from 72% prior to the employment report release; the probability of a rate hike has dropped from 28% to 17%. Rate expectations have also cooled. Currently, federal funds rate futures pricing suggests that the market expects the Federal Reserve to raise rates by a cumulative 22.2 basis points by the end of 2026, down from 25.5 basis points before the data release.