The US economy added 12,000 jobs in October, far below economist estimates of 100,000 new nonfarm payrolls. Hurricanes Milton and Helene and Boeing’s ongoing labor strikes heavily impacted the data collection process and the final labor figures.

PGIM Fixed Income chief economist Tom Porcelli breaks down the latest economic developments, highlighting implications for the equity market (^DJI, ^IXIC, ^GSPC), bond market yields (^TYX, ^TNX, ^FVX), and next week’s US presidential election.

Porcelli describes the jobs report as “softer on the margin,” noting hurricane impacts and significant downward revisions of 112,000 jobs in the previous month. These “softer undertones” align closely with current market pricing.

To address election-related market uncertainty, Porcelli anticipates a “busy” week on Wall Street with the Federal Reserve’s November FOMC meeting and the election coinciding next week. He suggests that a potentially split Congress could hinder major policy implementations regardless of the winner.

“No matter who wins, if they have a split Congress, it’s going to be really hard to get a lot of the plans you’re talking about done,” Porcelli tells Yahoo Finance. “But one thing I think is pretty clear with either candidate is you’re probably looking at continued deterioration in the deficit.”

Porcelli predicts a 10-year yield of around 4.30% on the yield curve, give or take 25 to 50 basis points in either direction.

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This post was written by Angel Smith