One jobs report flipped the Fed debate. On Friday, November 6, CME FedWatch put the probability of a quarter-point December increase at 76.8%, according to 24/7 Wall St., up from 66.9% a week earlier — and measured within the day, the odds rose from 70% to 78% after the data dropped.

TokenPost reports market pricing on Nov. 6 placed the probability of a 25-basis-point December hike at 72.8% ahead of the October jobs report, with a 27.2% chance of no change.

A hike would lift the federal funds target range from 3.75%-4.00% to 4.00%-4.25%.

October employment rose by 165,000 — roughly 2.5 times the LSEG consensus — versus an average monthly gain of just 48,000 over the prior 12 months, 24/7 Wall St. reports. Revisions added another 84,000 jobs across August and September.

Broad hiring mattered too: professional and business services added 70,000 jobs, health care 42,000, transportation and warehousing 25,000, and manufacturing 19,000.

Average hourly earnings rose 0.4% to $38.00, up 3.1% year over year — a wage figure the Fed watches closely because pay gains feed into service prices. Unemployment held at 4.1%.

What makes the shift striking is how recently the Fed signaled patience. According to 24/7 Wall St., the Fed hiked on September 16 by a 12-0 vote, then held on October 28 by a 10-2 vote, with Governor Lisa Cook and Cleveland Fed President Beth Hammack dissenting because they wanted another increase.

San Francisco Fed President Mary Daly said Friday the Fed will likely have to tighten further to bring down inflation that is still too high, while preferring a deliberate, gradual approach and offering no timing or size.

TokenPost reports that for January, pricing assigned a 21.6% probability to no change and a 15.1% probability to a cumulative 50-basis-point increase.

The immediate market reaction was oddly calm. 24/7 Wall St. reports the SPDR S&P 500 ETF Trust (SPY) rose 0.32%, the iShares 20+ Year Treasury Bond ETF (TLT) barely moved, and the dollar index gained 0.7% after the release.

The two-year Treasury yield, however, rose to 4.51% from 4.46% — a bigger move than the ten-year's rise to 4.86% — a pattern showing traders revised their view of the near-term Fed policy path rather than the long-run outlook. The S&P 500 closed Friday at 7,376.86 but still fell 2.68% for the week.

The Motley Fool, via AOL, reports that Goldman Sachs research found the S&P 500 has risen by an average of around 9% over the 12 months following the start of a new rate-hike cycle, despite declining roughly 2% on average in the first three months.

Historically, energy has been the standout — the State Street Energy Select SPDR ETF (XLE) jumped around 18% during the last major hike cycle from March 2022 through July 2023, with ExxonMobil and Energy Transfer delivering even higher returns.

The Fool also notes that shifting to short-duration bonds and reading the Fed's dot plot for hike aggressiveness are sensible moves, since rapid hikes have led to worse stock performance in the past.

The decision may come down to one more print. According to 24/7 Wall St., October CPI data arrives Tuesday, November 10 at 8:30 a.m.

ET, and the November jobs report follows Friday, December 4 — the last major data points before the FOMC meets December 8-9.

The outlet's framing: if CPI comes in cool and SPY closes back above $742.21, the hike view weakens, but if CPI runs hot and FedWatch's December odds climb past 77%, pressure on SPY — heavily weighted toward the technology stocks that led Thursday's AI-driven 4.36% decline — will likely build.