October Fed Hike Odds Drop From 72% to 38% as Labor Market Cools

Markets have rapidly repriced the path for Federal Reserve policy, with the probability of an October rate hike falling from 72% to 38% on CME FedWatch after the Fed's vice chair said there is "no need for urgency."
Payrolls increased by just 80,000 last month, reinforcing signs of a cooling labor market. PCE inflation remains above target, but weakening employment conditions are adding to the case for patience on additional tightening.
The long end remains a key pressure point. The 10-year Treasury yield has reached its highest level since 2002, meaning tighter financial conditions in the bond market are already doing part of the Fed's work.