NFP Quick Take: No pain, no pivot, dollar bulls to continue raging, stocks to suffer

• US job growth has remained robust in September – 263K jobs gained. 
• The Federal Reserve is likely to ramp up its hawkish rhetoric, raising the chances of fast hikes. 
• Stock advances will likely remain “bear market rallies,” and the dollar's reign is set to continue.

Winter is not coming – at least not to America's labor market, which remains strong, posting another impressive increase in jobs last month. An increase of 263K is just above 250K seen on the economic calendar and just under the “whisper number” which was around 280K. Leading indicators came out above expectations. 

That contrasts with Fed Chair Jerome Powell's “pain” talk – to see inflation falling, the economy needs to suffer. 

To put this NFP in proportion, I want to note that the US economy gained some 200,000 jobs before the pandemic, and that was considered healthy, steady growth. The economy is doing better. 

A negative jobs figure is unnecessary to see the Fed “pivot” from rapid rate rises. Dollar bears and stock bulls only need an NFP of under 100K to reach the “beginning of the end” of Fed tightening – slower rate hikes. Data for September suggest that a fourth consecutive 75 bps hike is cemented.

What about December? Markets foresee a 50 bps hike, and the chances of that softening to 25 bps have dropped.

The focus will soon shift to next week's all-important Consumer Price Index (CPI) report. Seeing peak inflation in the rearview mirror is critical for reaching peak Fed hawkishness and a market turnaround. Yet after Powell's “pain” comments in Jackson Hole, current robust job gains suggest that one weak inflation report is insufficient for a Fed pivot – nor a market one. 

Inflation slowed in July only to lift its ugly head in August. The labor market looks pretty – too pretty to provide calm for stock investors or dollar bears.