We expect headline payrolls rose 130k in September against current consensus estimates of 90k. We expect the unemployment rate edged down to 4.0%, with risks skewed to the upside. We expect average hourly earnings (AHE) growth slowed to 0.2% m-o-m. Overall, resilient labor market conditions should keep the Fed focused primarily on inflation. We do not have a strong view on US rates at current levels. Bond yields are headed higher for longer and any relief might be short term only. As long as US equities do not break down, bond yields might not soften materially. The stock market’s resilience has been a surprising, and broadly welcomed, subplot in the transition to higher interest rates. Stocks have withstood surging yields before. And as long as S&P is not falling below 7300, US bond yields might not find any significant relief. Macroeconomic data too supports a resilient US economy with Fed hikes doing little adverse impact on equities strength.
