Expectations of the Federal Reserve’s "higher-for-longer" interest rates are rising, as employment and consumption remain resilient.

Surveys by Bloomberg and Reuters show economists expect U.S. nonfarm payrolls to rise by around 90,000 and 100,000 respectively in September, with the unemployment rate holding steady at 4.1% to 4.2%. Meanwhile, Bloomberg projects U.S. real personal consumption expenditures (PCE) rose 0.5% month-over-month in August, which would mark the largest increase in over a year if realized. Sustained resilience in employment and consumption indicates U.S. economic demand has not cooled significantly, and supports the Federal Reserve’s continuation of tight monetary policy. Inflationary pressures remain the primary constraint facing the Fed. Markets anticipate both headline and core PCE month-over-month growth rates will accelerate in August, while core PCE’s year-over-year increase still stands at 3.3%—above the Fed’s 2% long-term target. The Federal Reserve raised interest rates by 25 basis points this month, its first hike in three years, and signaled further increases could come later this year. Currently, market expectations for another 25 basis point rate hike in October are rising. As U.S. Treasury yields stay elevated, pressures on corporate financing, the housing sector, and high-valuation assets are building. Upcoming data on job openings, PCE, ISM manufacturing, and nonfarm payrolls, set for release next week, will be critical factors shaping expectations for the Fed’s future interest rate path.