DID EMPLOYMENT NUMBERS SEAL THE DEAL?
October was huge for the economy. Payrolls surged by 271,000, handily beating all economists’ estimates. The month saw the strongest monthly payroll gains since last December. The surge in employment, in turn, dropped the unemployment rate down to 5%, the lowest it has been since May 2008.
We’ve been saying for a while now that we don’t see a fed funds rate increase coming, but the facts have changed. Even so, it’s important to remember, even if the Fed does raise the fed funds rate, that doesn’t mean rates are going higher. When the Fed made its other major policy change – to systematically withdraw from quantitative easing two years ago – rates ran up until the time the Fed begin to withdraw. Rates then drifted lower by a full percentage point over the subsequent year.