Rate Hike Likely Deferred to December

The September jobs report, showing only 29,000 new payrolls, dramatically shifted the economic narrative from one of robust growth. This data volatility highlights the importance of focusing on long-term fundamentals like monetary policy and technological innovation, rather than short-term fluctuations.

Despite the headline, other employment measures, like civilian employment which rose 406,000, show a less concerning picture. We still expect Q3 GDP growth around 3.0-3.5%, with the Fed likely delaying a rate hike until December. This patience is supported by moderate wage growth and contained inflation, suggesting no immediate need to tighten policy.

However, nominal GDP growth at 6.3% year-over-year may signal a low Fed funds rate. Rate hikes could also disproportionately hurt interest-sensitive sectors like housing without significantly impacting AI-driven investment.