By Annie Lai, Analyst

Jobs Data Shocker Shakes Markets

Last Friday’s jobs report delivered a real curveball: just 25K new jobs, well below the market consensus of 75K. The 10-year Treasury yield took a nosedive, dropping 11 basis points to 4.07%, and rate cut expectations jumped from two cuts to three by year-end.

This is the first jobs report since the previous BLS leader got the boot for those messy downward revisions. Despite all the criticism about their data collection methods, the BLS has stuck with the same methodology, at least for now.

This Tuesday, the BLS issued a disappointing revision: 12-month job growth was marked down by 911,000 through March 2025. The market reaction was relatively muted. The clouds had already been on the horizon. However, the revision will provide more impetus for the Fed to cut rates.

On Wednesday, PPI came in cool at -0.1%, a precursor to CPI. The print again suggested that the impact of tariffs remains marginal (for now), as producers continue to draw down previously stocked inventories. Regardless of tomorrow’s CPI print, market reaction is likely to remain subdued as a 25bp rate cut on September 17 is now all but locked in, with 10% even betting on a jumbo 50bp move.

Markets don’t repeat themselves, but they do rhyme. With 10-year Treasury sinking to year-to-date lows, markets are pricing in tomorrow’s Fed move. That makes this a prime window to lock in fixed rates or refinance. Remember last September? The Fed hesitated, and then finally cut 50bp. Instead of easing conditions, the market “sold the news” and the 10-year Treasury yield surged 100bp in just three months.

In the longer term, U.S. fiscal spending spree isn’t slowing down, which means more debt and, eventually, upward pressure on the yield curve. Strike while the iron’s hot, before the soda pop fizzles out.

Source: CME