The US labor market cooled more than expected in September, with nonfarm payrolls increasing by only 29,000, well below the 84,000 consensus forecast. The unemployment rate ticked up to 4.2% from 4.1%, while the labor force participation rate edged higher to 61.8%. The report also included downward revisions to prior months, with July payrolls revised from a gain of 21,000 to a loss of 10,000, and August growth trimmed from 162,000 to 133,000. Combined, the revisions cut 60,000 jobs from the previous two-month total.
The softer data reinforced market expectations that the Federal Reserve will hold interest rates steady at its October meeting. Traders priced roughly a 25% chance of a rate hike in October, down from about 70% earlier in the week. The unemployment rate has stayed within a narrow 4.1% to 4.3% range since March, and the employment-population ratio stood at 59.2% in September.
Gold slips as dollar, yields weigh
Gold prices initially climbed more than 1% after the weak jobs report, but later reversed to close lower. Spot gold fell 0.75% to $4,146.54 an ounce, marking a weekly decline of about 3.19%. US gold futures settled 0.59% lower at $4,177.50. A stronger dollar and elevated Treasury yields pressured the non-yielding metal, overshadowing the support from reduced rate-hike expectations.
Other precious metals also declined, with spot silver down 0.8% to $60.36, platinum losing 2% to $1,692.90, and palladium slipping 0.5%. All three were on track for weekly losses.
Oil mixed as Europe taps diesel reserves
Oil prices were mixed after European countries agreed to release additional diesel stockpiles, easing concerns about refined fuel supplies. West Texas Intermediate fell 1.72% to $91.28 a barrel, while Brent crude reversed an initial loss to trade 0.24% higher at $102.56. For the week, Brent was down about 1.51% and WTI around 1.05% lower.
The European Union's move followed a French proposal to release 50 million barrels of diesel, with the International Energy Agency potentially adding another 50 million barrels of crude. This came after Chinese refiners suspended October fuel exports to preserve domestic inventories, and refinery disruptions in the Middle East and Russia constrained refined-product supplies. Barclays raised its fourth-quarter Brent forecast by $20 to $115 a barrel and lifted its 2026 outlook to $100, citing strong physical-market fundamentals.
Treasury yields reverse higher
Treasury yields initially fell after the employment data but reversed course, with the 10-year yield rising nearly five basis points to 5.292%, and the 30-year yield up three basis points to 5.642%. The two-year yield, sensitive to Fed policy expectations, gained five basis points to 4.841%. Earlier in the week, the 10-year yield had touched its highest level since 2002, as investors weighed inflation concerns and the possibility that rates could stay elevated for longer.
The yield reversal indicated that markets were still assessing the broader policy outlook despite the weaker labor market. December remains a potential window for further tightening, and investors continued to debate the likelihood of another rate increase later this year. European government bond yields also eased by around three basis points as pressure on global debt moderated after the sharp sell-off earlier in the week.
This article is for informational purposes only and does not constitute financial advice.
