Bonds & Rates
Home›Bonds & Rates›Economy›Surprise July jobs slump boosts odds Fed stays on hold
Surprise July jobs slump boosts odds Fed stays on hold
The report showed job losses of 23,000 and a 4.1% unemployment rate, while implied 2026 hike odds fell to 56% from 63%.
Wall Street reassessed the latest July labor market report as a sign the Federal Reserve may be able to stay on hold, after the Bureau of Labor Statistics said the economy lost 23,000 jobs versus expectations. The unemployment rate fell to 4.1%, while labor force participation dropped to a near-pandemic low, according to the report.
Economists cited weaker momentum, noting the three-month rolling average of job gains fell to 20,000 and the six-month average declined to 44,000. Ameriprise chief economist Russell Price said there were “many moving parts,” but “very little to like,” adding that if hiring falters, consumers and the broader economy might follow.
The jobs data also pushed Treasury yields lower on Friday, reversing earlier gains from the week when traders were signaling policymakers might be behind the curve on inflation. Strategists said the weak labor numbers give the Fed cover to hold rates steady despite sticky inflation, helped by softer-than-expected wage growth.
Market pricing shifted as well, with implied odds of a Fed rate hike in 2026 falling to 56% from 63% on Polymarket. After the report, stocks jumped, with weekly gains led by large technology names, including Nvidia’s 10% weekly rise.