A soft jobs report cools the Fed's October hike risk

Good morning. Last night's September jobs report was a jolt. The US added just 29,000 jobs, far below the 84,000 or so economists expected, and the unemployment rate ticked up from 4.1% to 4.2%. Prior months were revised down by about 60,000 combined.

It matters because of what it means for the Fed. After Wednesday's softer-than-expected inflation reading, a cooler labor market has all but erased the odds of an October rate hike, giving the Fed room to wait. Not everyone reads it as recession warning, though. Labor force participation actually improved, and some strategists warn that a single bad inflation print could put hikes back on the table.

Stocks cheered. The Dow jumped 324 points, the S&P 500 gained 0.79%, and the Nasdaq touched a fresh record intraday, led by chipmakers. Bonds were less enthusiastic. Treasuries rallied briefly, then gave it back, leaving the 10-year yield in the 5.3% range, while a widening gap between French and German yields kept European fiscal worries alive.

There was some good news on oil, too. The G7 agreed to release emergency diesel and crude stockpiles, sending oil down more than 4%, and President Trump said he won't pursue a diesel export ban. But with UK diesel topping 2 pounds a litre for the first time and eurozone inflation at a three-year high, the energy-driven price pressure isn't over.