Wall Street firms are increasingly split over whether the Federal Reserve will cut interest rates again before Christmas.
A Reuters survey of Wall Street firms taken on yesterday after the September employment report was released found ten of the 20 primary bond dealers surveyed say the economy needs more stimulus, in the form of another rate cut. But the other 10 still expect the recovery will stagger forward enough to keep the Fed on hold.
The September payrolls report was less gloomy than many in the market feared, which doused speculation that the Fed could lower borrowing costs even before its next meeting on November 6th.
But others believe the numbers will deteriorate again.
The September payrolls report showed a drop of 43,000 jobs, but the news was more than offset by a hefty upward revision to August to show a solid gain of 107,000 jobs.
"There was a lot of fear going into this report that it could have been a lot worse," said ABN AMRO chief US economist Mr Steve Ricchiutto.
"The important thing is the economy doesn't show any real signs of undue stress despite everything else that's going on. There's not enough to get the Fed off the marker," he said.
But economists who were already expecting a rate cut were not swayed by the payrolls report. "We still think the Fed will cut," said Deutsche Bank chief US economist Mr Peter Hooper.
The futures market fell after the payrolls report, reducing the odds on a rate cut before the next Fed meeting to close to zero. The December fed funds contract is still priced for a rate reduction by the end of the year.