One factor that very often puzzles individuals who don’t work in monetary markets is their tendency to deal with seemingly good news as unhealthy.

We received a traditional instance on Friday with news that US employers added 336,000 jobs in September.

That was up from 227,000 in August (a determine itself revised greater from the earlier 187,000) and means forward of the 170,000 Wall Street had been on the lookout for.

The numbers had been, within the jargon, very “hot”.

Good news? Well, sure, if you’re one of many Americans who was capable of transfer into employment throughout the month or swap to a better-paid position elsewhere.

So far as markets had been involved although, it was something however good news.

The figures recommend that the US financial system is continuous to motor, although the US Federal Reserve has raised rates of interest 11 instances since March 2022 to fight inflation.

That, in flip, signifies that the Fed might need to resume price hikes – having not carried out so since 27 July.

Accordingly, yields – which rise as the worth falls – on US Treasury bonds spiked greater.

The yield on two-year notes jumped to as excessive as 4.847%, having closed on Thursday night at 4.716%, whereas the yield on 10-year US Treasuries, which had been 4.716% on Thursday night, jumped to as a lot as 4.858%.

Yields at the moment are approaching the multi-year highs hit earlier this week as markets began to cost in the opportunity of rates of interest remaining greater for longer – a process that got under way in earnest in direction of the top of September.

Hetal Mehta, head of financial analysis on the wealth supervisor St James’s Place, stated: “Today’s payrolls print was punchy, with the monthly change nearly double what the market was expecting and the highest since January.

“When we zoom out, we will nonetheless see proof of an enchancment within the labour market imbalance, however right this moment’s print underscores the gradual progress; the US nonetheless has way more job openings than it has individuals on the lookout for work.

“This is clearly inconsistent with what the Fed requires to get inflation down, let alone signal rate cuts.”

Seema Shah, chief international strategist at Principal Asset Management, added: “The blowout jobs report is maybe not so good news for markets.

“Not solely does right this moment’s report point out the financial system is nearly too scorching to deal with and the Fed might want to reply with extra price hikes, it reinforces the upper for longer narrative that has been spooking bond markets for the previous few weeks.”

What was particularly curious about the September numbers was that it seemed perfectly reasonable to expect a slowdown in job creation.

The long-running actors and writers strikes in the TV and film industry has depressed hiring in those industries, while the three-week old strike action being taken by the United Auto Workers union against Ford, General Motors and Stellantis can be expected to have a similar impact on the car manufacturing and car parts sectors.

That may have been the case. But subdued activity in those sectors was more than made up for by renewed hiring in the leisure and hospitality sectors where nearly 100,000 jobs were created during the month – finally taking the numbers employed in bars and restaurants back to the levels seen before the pandemic.

Other sectors that added more jobs during the month included healthcare, where 41,000 jobs were created during the month, and transport. The expected uplift created by the start of the new school and college year also had an impact.

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The influence of the numbers was felt in different asset courses. The essential fairness indices on Wall Street fell on the open, whereas on the overseas alternate markets – the place the US greenback this week hit 150 yen for the primary time in a 12 months and capped a document unbroken 12-week profitable run towards the euro – noticed the buck resume its upward path.

The pound, after a good 48 hours, additionally fell towards the buck and stays near the degrees towards the US greenback it hit final March.

Not all the information launched right this moment was essentially unhealthy.

Average hourly earnings progress throughout September was up 0.2% month on month and up 4.2% on a year-on-year foundation, which was barely decrease than the 4.3% seen in August.

That appears good for shopper spending on the entire, however not sufficiently sturdy to fret the Fed, though the latter has been on the lookout for annual earnings progress to return to pre-pandemic ranges of two% to three%.

The different key revelation was that the labour power participation price – the proportion of individuals of working age who’re in work or on the lookout for work – was 62.8%.

That helps clarify why, opposite to expectations, the unemployment price was unchanged at 3.8% – the very best since February 2022.

The market had been on the lookout for a slight fall to three.7%, however the truth that the speed was unchanged speaks to the truth that extra Americans of working age are getting into the roles market. The Fed will take consolation from that as a result of, when extra individuals are on the lookout for work, employers need to pay much less to draw them.

These latter developments do level to the “soft landing” that markets have craved.

But the general conclusion is that the US financial system continues to be rising sufficiently quickly – and the roles market sufficiently strong – for the Fed to lift rates of interest at the least yet another time earlier than the top of the 12 months.