How high will unemployment get in 2026?

NY Fed SCE Sept: median 1y inflation expectations 3.9% (+0.3, highest since May 2023); 3y 3.3% (+0.1); 5y still 3.0%. Household spending-growth expectations also hit 5.5% (+0.3), another May 2023 high.

🏛️ MACRO HEADWINDS FOMC minutes (Oct 7): All 19 Fed officials backed September's rate hike, most see another before year-end. Inflation remained elevated with insufficient progress. CPI sits at 3.4% YoY, 70% above the Fed's 2% target. Jobless claims came at 197K vs. 200K expected, showing a labor market tight enough for the Fed to stay restrictive. Bitcoin gave back early gains after every data release this week. Macro isn't helping.

Bad news is good news again. Sept payrolls: +29k vs ~84-95k expected. Unemployment 4.2%. July revised to -10k. Aug cut to 133k. October hike odds went from ~70% to under 20% in a week. Nasdaq closed at a record Friday. Context: the Fed hiked in September for the first time in 3 years. The market spent all of last week pricing a second one for October. One weak print and that bet got unwound almost entirely. December hike is still priced, so this is a delay, not a pivot. What I'm watching on ES: does the bid hold if the next data point comes in hot? Rallies built on "Fed blinks" are fragile when the 10y is still sitting at 5.28%. Weak jobs + sticky yields is not the same as weak jobs + falling yields. Trading it as a relief rally until price proves otherwise. Not marrying the long. How are you playing the next CPI?

The Fed outlook is getting harder to price. September payrolls came in at just 29K, unemployment rose to 4.2% and wage growth cooled to 3.0% YoY. That weakens the labor market case for keeping policy restrictive, but sticky inflation and energy risks still complicate the path. On @trylimitless traders are already pricing specific Fed cut timelines: October: 0.9% YES December: 4.3% YES June has already resolved NO. The interesting part is watching how these probabilities move as new macro data comes in. That’s what makes prediction markets useful for tracking the Fed narrative in real time.

TIMIRAOS: WEAK JOBS REPORT CLEARS PATH FOR FED PAUSE The September jobs report gives the Fed more room to hold rates steady in October, with hiring slowing and unemployment edging up to 4.2%. With little evidence of labor-market inflation pressure, attention now shifts to September CPI on October 14, which could be more decisive for the next rate move.

This ho-hum labor market report doesn't really change the story for the Fed, whose senior officials had gone out of their way this week to signal that an October rate hike probably wasn't their base-case. The biggest development was what it didn't show: few signs from wages or the unemployment rate that the labor market is tightening in ways that would add meaningfully to price pressures. The September CPI, due Oct. 14, was always going to be more important than this report, which nevertheless takes some of the hawkish edge off of the recent repricing of the Fed's path in markets.

🚨BREAKING: U.S. Nonfarm Payrolls came in FAR BELOW expectations. NFP: 29K vs 90K | prev. 162K Unemployment rate: 4.2% vs 4.1% expected That is a 68% miss versus expectations and an 82% drop from the previous month. Markets were already bracing for weaker hiring, but this report came in FAR WORSE than expected. Combined with SOFTER jobless claims and PCE, it strengthens the case for earlier or deeper Fed rate cuts. That typically means lower yields and a weaker dollar, which can SUPPORT stocks and crypto. The RISK though is that continued labor weakness shifts the story from rate-cut optimism to recession fears.