September's soft NFP report pushed the probability of an October Fed pause to 77.9%, but Treasury yields and Dollar Index both reversed higher by Friday's close as markets judged the data wasn't enough to resolve the bigger inflation risk—a risk Brent crude's hold above $100, despite a coordinated G7 reserve release, helped confirm is still live. Together, that shows markets are repricing when the Fed moves next, not whether further tightening is still on the table.
September’s US employment report was almost the cleanest dovish combination markets could have received. Payrolls rose just 29K against a 90K consensus, unemployment edged up to 4.2%, wages undershot and prior months were revised lower again. Treasury yields fell, October Fed hike expectations collapsed into the low teens and the Dollar Index was knocked back below 102.
Dollar Index is heading towards the 102.77–103.00 resistance zone while Silver stabilizes near 60 after falling from 71.16—the two markets are trading the same macro bet from opposite sides, and September's NFP report, including the wage component, could resolve both in the same session.
The OAT-Bund spread widened past 140.6bp, its widest since the 2012 eurozone debt crisis, as French 10-year yields surged to 4.935% while German Bund yields fell to 3.529%—a divergence pointing to a France-specific sovereign risk premium that EUR/CHF is now starting to transmit into FX.