The September jobs report showed modest softening, with the unemployment rate rising to 4.2 per cent and 29,000 jobs added, below expectations. Both July and August numbers were revised downward, though Fed Chair Warsh emphasized focusing on trends rather than individual data points. The overall labor market trend remains a slow but steady strengthening, with the six-month rolling average indicating recovery since the second half of last year.
Despite the softer report, bond markets reacted little, with two-year and 10-year Treasury yields rising. Investors appear more focused on real GDP growth, revised up to 2.5 per cent for Q2 and projected near 3 per cent for Q3. This complicates inflation outlook, especially with energy prices still elevated after the G7 released 100mn barrels of reserves.
Market breadth has also narrowed significantly since mid-August, with fewer S&P 500 companies rising. While not a reliable leading indicator, narrowing breadth may signal economic fragility. Key cyclical sectors like manufacturing, construction, and leisure/hospitality added fewer jobs in September than August, reinforcing concerns about sustained momentum.
Author: Robert Armstrong, Financial Times Markets, October 5 2026.
Source: Financial Times Markets · Summarized by HeadlinesBriefing