ICYMI – Morgan Stanley has withdrawn its call for a December Federal Reserve rate cut after the delayed September jobs report showed a surprisingly strong rebound in hiring. U.S. non-farm payrolls rose by 119,000, reversing a small drop in August and more than doubling consensus expectations for a modest 50,000 gain.
Despite the unemployment rate rising to 4.4%, its highest in four years, the bank said the breadth of the payroll rebound indicates that the summer slowdown in hiring “may have been overstated.” Strategists argue the data points to underlying labour-market stabilisation rather than renewed weakness — a key reason to push back expectations for near-term policy easing.
The report had been due in early October but was delayed by the 43-day U.S. government shutdown. With the stronger print in hand, Morgan Stanley now sees the first rate cut arriving in January, followed by moves in April and June 2026, taking the fed funds rate down to 3.00%–3.25% over the course of next year.
This article was written by Eamonn Sheridan at investinglive.com.