Fed Jobs Data Raises Hike Odds, But Equities Stay Priced High

October's stronger-than-expected jobs report, with roughly 165,000 payrolls added, has increased the probability of a short-term Federal Reserve rate hike at the upcoming meeting, though the outcome remains inconclusive. The report reverses the prior month's below-expectation trend. Over the last month, long-term Treasury yields have moderated by nearly 50 basis points, while equities declined about 5.5%, reducing the valuation gap. Despite recent volatility and AI-driven sell-offs, broad equities remain richly valued versus rising short-term yields. In this uncertain environment, short-term cash proxies are becoming attractive for tactical allocations due to minimal duration risk.