US July Jobs Miss, Unemployment Rise Fuel September Rate Cut Odds

The July jobs report revealed a significant slowdown in the U.S. labor market, with only 73,000 jobs added, far below the expected 104,000, and a rise in the unemployment rate to 4.2%. More striking were the dramatic downward revisions to May and June payrolls, which collectively erased 258,000 jobs, marking the largest two-month revision since the early pandemic period and shaking confidence in the labor market's strength. Economists and strategists widely described the report as a major red flag and a gamechanger, suggesting that the labor market is weakening faster than previously thought, with broad-based weakness outside of sectors like healthcare. This new data has shifted market expectations sharply toward the Federal Reserve cutting interest rates in September, as the revised figures undermine the Fed's previous stance on maintaining restrictive policies. Market reactions included falling Treasury yields, declining stock futures, and a retreat in the dollar, reflecting growing investor confidence that rate cuts are imminent. Analysts emphasize that the report justifies fresh Fed action to balance the economy amid easing inflation and faltering job growth.