The US economy added 150,000 jobs in October and hiring was slower than initially reported during the prior two months.

That’s according to Friday’s payrolls report which was amenable to a “Goldilocks” interpretation, or if not, it was at least a boon to doves and bond bulls.

Consensus expected 180,000 from the headline print. The range of estimates, from more than five-dozen economists, was 20,000 to 235,000.

Revisions subtracted 39,000 from September’s scorching-hot headline, and 62,000 from August’s.

Those downward adjustments were welcome. Recall that the headline pace of jobs growth re-accelerated since June, and September’s NFP report came with the first upward revisions of 2023. That threatened to change the narrative around the labor market, particularly in light of a subsequent drop in initial jobless claims to the lowest since January. Indeed, the Fed tweaked its assessment of jobs growth in the November FOMC statement to acknowledge that hiring firmed in recent months.

In light of all that, and with another stubbornly elevated JOLTS print in hand, a hot October NFP report would’ve been unwelcome, and might’ve short circuited the nascent bond rally. Of course, nobody wants a negative NFP headline. Just some evidence of softening. Friday’s report obliged. 150,000 could very plausibly be described as a best-case print.

Manufacturing payrolls contracted by 35,000 in part due to strikes. Leisure and hospitality added a mere 19,000 jobs last month, less than half the 12-month average. Most of the jobs in October were in government and health care.

The MoM pace of average hourly earnings growth came in below estimates at 0.2%. That too was favorable, and underscored the message from ADP’s “pay insights” update and the unexpected drop in unit labor costs for Q3. Suffice to say the hawkish signal from the warm ECI reading is now less important than it would’ve been had the balance of this week’s data not skewed decisively dovish. I should note that the 4.1% YoY AHE print was slightly warmer than expected.

The unemployment rate moved up to 3.9%, the highest since January of 2022. Consensus expected no change from September’s 3.8% rate.

That too could be interpreted as bullish for risk assets to the extent it’s indicative of a softer jobs market, but note that the participation rate ticked lower.

In the September SEP, the Fed indicated officials don’t see the jobless rate moving much beyond 4% this cycle. Private sector economists have their doubts, and indeed, Jerome Powell reiterated this week that whatever the median projection might show, the Fed does anticipate a softer labor market. The implication: The SEP was just officials marking to market. The unemployment rate could well overshoot the median forecast and indeed it’d be surprising if it didn’t.

Notably, the household survey showed a 348,000 decline. With the usual caveat that no one trades the household survey for a reason, that was the largest drop since the original pandemic jobs apocalypse in April of 2020.

In September, the household survey printed just 86,000. The three-month moving average is now negative.

If the Fed was already unlikely to hike again in December (Powell’s protestations to the contrary notwithstanding), they’re even less likely to pull that trigger now.

Of course, the Committee will see another jobs report before next month’s policy meeting as well as inflation updates and a bevy of other indicators. But October payrolls was incremental evidence to support the market’s assumption that the Fed’s done. I’d expect bonds to respond accordingly.