Data Preview & Forecast
MUFG forecasts October 2026 nonfarm payrolls (NFP) to grow by 90k, above the median of 65k from Bloomberg contributors, and above the 3-month average growth of 51k.
The unemployment rate (U/R) is expected to stay at 4.2% in October, in line with the median estimate from Bloomberg contributors.
Risks tilted to stronger payrolls – Rising vacancies in key sectors, including government and professional & business services, imply elevated demand and a rebound in payrolls growth in October. Favorable seasonal factors are expected to maintain relatively strong jobs growth in leisure & hospitality, and regional PMIs point to continued demand in the manufacturing sector.
Risks tilted to lower U/R – A normalization in new and reentrants to the labor force could apply downward pressure on unemployment.
Market Thoughts
Base-case risk: Recent data suggests improvement in the labor market, and we expect that to continue with this NFP report. That said, Treasuries just had a sizeable decline in rates heading into this Friday’s release. Although we could see rates reverse some of the recent move, so long as we are in downward channel in rates, we recommend buying any meaningful dip on stronger than expected NFP.
Downside risk: Broader risk markets have been experiencing greater realized volatility post midterm election which has bolstered demand for Treasuries. If the NFP monthly change comes in under the 3-month moving average, that would likely exacerbate the rally lower in rates.
Upside risk: Given that our NFP base-case is already above consensus, the rates markets would likely need to see a monthly change of ~200k and a drop in the U/R (given the current negative market backdrop) to triggers a sustained sell-off that lasts longer than a few hours.
Download the PDF to view the complete forecast with market implications