The US job creation engine snapped back into high gear in September, crushing odds on a second outsized rate cut at the Federal Reserve’s November meeting. According to data just released by the Bureau of Labor Statistics, 254,000 jobs were added in the month, topping the 150,000 consensus forecast, and revisions to the July and August prints saw them rise by a combined 72,000 positions.

Wage gains remained remarkably strong, pointing to an improvement in worker bargaining power. Average hourly earnings climbed 0.4 percent month-over-month, down slightly from 0.5 percent in the prior month, and were up 4 percent year-over-year.

The unemployment rate fell to 4.1 percent – below the expected 4.2 percent. The labour force participation rate held steady, the household survey showed a 450,000-position gain, suggesting that the improvement is not a statistical aberration.

Markets are braced for a weaker payrolls report in November, with furloughs among major manufacturers, the short-lived port strike, and Hurricane Helene’s impact all likely to play havoc with those seeking a clean read on underlying labour market conditions for the month of October.

The dollar is rallying hard and Treasury yields are spiking across the front of the curve as traders further reduce bets on a second half-percentage-point move at the Federal Reserve’s November meeting and brace for a less aggressive easing trajectory in the months to come – but the impact on the dollar could fade somewhat in the coming hours however as a sympathetic reaction ripples across global rates markets. Central banks in the euro area, United Kingdom, and Canada are all now likely to move more cautiously, and traders are likely to raise expected interest rate trajectories on a wholesale basis.

Bottom line: A “no landing” scenario for the United States has suddenly become far more plausible, suggesting that expectations for aggressive monetary easing should be ratcheted back across most major economies. The dollar could add to its gains, and volatility is likely to rise throughout the currency markets as an adjustment process takes place.