Soft job market weakens hiking case

Yesterday’s jobs report was a shock, and markets are telling the story loud and clear. Nonfarm payrolls fell by 23,000 in July, versus expectations for an ~80-95K gain. June and May were revised down a combined 103,000 jobs. Unemployment actually ticked down to 4.1%, but the underlying trend is unmistakably softening, the US has added an average of just ~34K jobs/month over the past year.

Here’s how markets reacted: (1) Equities: Stocks rallied. The S&P 500 pushed toward record highs and the Nasdaq added roughly 1%, as investors bet a weaker labor market keeps the Fed on a rate-cutting path rather than forcing a hike. (2) Bonds: Treasury yields fell sharply on the print, with short-dated maturities outperforming; the classic “bad news is good news” trade as rate-cut odds firmed up. Gains trimmed slightly later as oil prices ticked higher.(3) Currencies: The dollar weakened, with the DXY slipping roughly 0.3% and the euro touching a seven-week high, as reduced hike risk pressured the greenback.(4) Precious metals: Gold and silver extended their weekly gains, with silver outperforming, up over 3%, as lower real yields and a softer dollar boosted the safe-haven/inflation-hedge trade. Net-net: a weak labor market print, a market that’s still reading it as Fed-friendly. Worth watching whether that “good news is bad news” dynamic flips if inflation data doesn’t cooperate.

Want to know more? You can register for free at Fund@mental.

#iamfundamental #soyfundamental #wealthmanagement #familyoffice #financialadvisor #financialplanning #policymistake #ratecut #stagflation