The market is now at 51% for 50 bps and 49% for 25 bps — almost as close as possible.
Nick Timiraos from the WSJ highlights what the jobs report means:
There was a chance the jobs report would provide an obvious signal on the size of the first cut, and futures-market pricing would move to 90% right away for either 25 or for 50. Instead, this report doesn’t neatly resolve the tactical question, and the pricing is at 50-50. The headline figures weren’t bad enough to make 50 the base case but, in light of the revisions, it wasn’t good enough to convincingly and cleanly douse speculation on a larger cut.
The dollar has rebounded on this comment as the market takes it as a sign of uncertainty.
Timiraos also highlighted this:
In July, the three-month average of private-sector hiring was 146,000. Today’s report shows that figure was revised down to 126,000. And with the August number, private-sector hiring is now at 96,000, on average, over the last three months.
Separately, former Boston Fed President Eric Rosengren also said 25 bps was more likely:
Payroll increased 142k, unemployment rate decline 0.1 to 4.2%. Payroll construction grew by 24k and leisure and hospitality grew by 46K. Not a pattern that indicates a high recession prob. Consistent with 2% real GDP. 50 basis point cut unlikely, more consistent with 25 cut.