Jobs rebound lifts expectation for Fed tapering

The U.S. labor market appears to be on the mend after a late summer swoon.

The number of Americans who filed for new jobless benefits dropped last week by the most in three months, according to data released Thursday by the Labor Department, snapping three-weeks of rising initial claims...

And, layoffs were down 85 percent in September compared to the same time last year, according to a separate survey from outplacement firm Challenger, Gray & Christmas also released on Thursday.

Investors are now eagerly awaiting Friday's official employment data for confirmation hiring picked up last month as the health crisis slowed down.

The consensus estimate for September’s job gain comes in at half a million jobs.

But no matter what the number, few Federal Reserve watchers expect the report to derail Fed plans to start pulling back on its unprecedented support for the economy.

Fed Chair Jerome Powell signaled last month there was broad agreement among policymakers to begin reducing the U.S. central bank's $120 billion in monthly asset purchases as soon as November, as long Friday's jobs report is "decent."

Inflation is running way hotter, for way longer than desired and that's a problem.

Here's Fed Chief Jerome Powell testifying before the Senate last week.

"Inflation is elevated and will likely remain so in coming months before moderating as the economy continues to reopen. We are seeing upward pressure on prices, particularly due to supply bottlenecks in some sectors. These effects have been larger and longer lasting than anticipated."

And that's putting pressure on the Fed to curb its massive bond-buying program and let some steam out of inflation.

A pick-up in hiring gives the Fed the room to do so.

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