NFP Preview - October 2026

Author: Kathleen Brooks, Research Director UK

Date: 2 October 2026

Key Takeaways

• The US September jobs data will significantly influence the Federal Reserve's interest rate decision for October.
• Market expectations are set for a payroll reading of 98,000 and an unemployment rate of 4.1%.
• Stronger wage growth and payroll figures could lead to higher Treasury yields, negatively impacting stock indices.

Current Market Context

The jobs data for September is scheduled for release on Friday, with expectations of 98,000 new jobs added and the unemployment rate holding steady at 4.1%. Average hourly earnings are anticipated to rise to a 3.2% annual rate.

In the lead-up to the Federal Reserve's meeting, there has been notable volatility in the Treasury market, mixed stock performance, and a decline in the likelihood of consecutive rate hikes. Following a 25 basis point increase last month, the probability of a rate hike this month has dropped to 24%, down from over 70% a week prior.

Payrolls as a Referendum on Fed Policy

The upcoming jobs report is viewed as a critical indicator for the Fed's decision-making process regarding interest rates. While the labor market has shown strength, with ADP private sector payrolls exceeding expectations and a significant drop in job cuts reported, hiring has been subdued. This suggests that employers are adopting a cautious approach amid rising energy costs and the impact of previous Fed rate hikes on profits.

AI-related layoffs are also a concern, although they have not yet significantly affected the unemployment rate. The Challenger jobs report indicates a stable labor market, supported by initial jobless claims falling to their lowest level since July.

Potential Market Reactions

Analysts caution that payroll figures could surprise on the downside, particularly given seasonal adjustments that may have affected previous readings. The focus may shift to wage data, as persistent wage growth could compel the Fed to reconsider its stance on interest rates.

If payrolls exceed 130,000 and wage growth hits 0.4%, the market may reprice expectations for an October rate hike, potentially pushing the 10-year Treasury yield back towards 5.3% and impacting the USD/JPY exchange rate. Conversely, a weaker payroll figure (60,000 or below) coupled with a rising unemployment rate could lead to falling Treasury yields, a weaker dollar, and a boost for US blue-chip stocks.

Conclusion

The upcoming payroll numbers are poised to play a decisive role in shaping the Fed's October meeting and will likely influence major asset prices as the month begins.

About the Author

Kathleen Brooks is the UK's research director with over 20 years of experience in financial markets. She specializes in foreign exchange and retail trading, and her analysis is widely respected across various media platforms. Kathleen has been recognized as City AM's Analyst of the Year 2026.