Payrolls Shrink by 23,000, Wiping Out September Rate-Hike Bets
The July employment report broke the wrong way. Nonfarm payrolls fell by 23,000 last month, the Bureau of Labor Statistics reported at 8:30 a.m. ET (3:30 p.m. in Istanbul), against forecasts of an 80,000 to 88,000 gain and June's 57,000 increase — the first outright decline in months. The unemployment rate still ticked down to 4.1% from 4.2%, while annual average hourly earnings growth came in at 3.2%, below the 3.5% consensus. The losses were concentrated in local government education and retail trade.
The market reaction was immediate: S&P 500 futures rose 0.34%, Nasdaq 100 futures 0.76% and Dow futures 0.18% after the print. The mechanism matters here — bond markets had spent recent weeks pricing the odds of a Fed rate HIKE in September, with the 10-year Treasury yield at 4.67% going into the data; a shrinking payroll count takes that scenario off the table, pulls rate expectations lower, and rewards the rate-sensitive growth names most, which is why the Nasdaq led.
The second story is Hormuz. Iran and Oman have agreed on a shipping corridor through the Strait of Hormuz that Iranian officials say will stay open for two to four months and stops well short of a full reopening — Brent is near $79 and WTI near $75, with WTI down 11% over the week's first three sessions, though Brent jumped roughly 4% on Thursday after an explosion aboard a tanker off Kumzar, Oman and a Houthi strike on a Saudi tanker in the Gulf of Aden, which is what capped Wall Street that day. Gold is taking the other side of that uncertainty, holding above $4,250 an ounce and heading for its best week since January.
