TD Securities Cuts Fed Rate Hike Forecast After September Jobs Data

The Quick Take

• TD Securities downgraded its Fed rate hike expectations following the September jobs report miss
• Soft labor data provides Fed policymakers cover to hold rates steady at the October meeting
• Street consensus is rapidly shifting toward a 'pause and monitor' stance on further tightening

TD Securities joined a growing list of major banks reassessing their Fed rate-hike forecasts following September's softer payroll reading. The revision reflects a shift in the probability distribution for October's FOMC meeting toward a hold, with TD now viewing additional tightening as less likely in the near term. This type of institutional forecast revision tends to reinforce market moves already underway, as trader positioning adjusts to align with major bank guidance.

From a market-impact perspective, TD Securities' downgrade matters because institutional consensus changes can have a self-fulfilling quality in rate markets. When major sell-side shops revise their Fed calls in the same direction, futures pricing typically follows, compressing implied hike probabilities further. The practical effect is additional downward pressure on short-term Treasury yields and a marginal boost to equity multiples — a continuation of the dynamic that drove Friday's equity rally.

The key watch point remains whether the Fed itself signals agreement with the market's revised interpretation. Chair Powell and the broader FOMC have repeatedly cautioned against assuming a dovish pivot based on a single data point. If multiple soft prints accumulate — jobs, CPI, PCE — the consensus shift will become durable. One payroll miss keeps the situation fluid; two or three would cement the revised outlook.

Synthesized from 1 source.