Investor expectations for a rate cut in the U.S. surged after fresh employment data indicated a slowdown in job growth.
Labor Market Data
Investor expectations for a Federal Reserve rate cut in September surged dramatically to 75% following the release of fresh labor market data. The figures showed a clear slowdown in job growth and rising unemployment signals — evidence that the U.S. economy may be cooling faster than anticipated.
Pressure on the Federal Reserve
The latest labor data suggests the job market is losing momentum. Claims for unemployment benefits are rising and hiring is slowing down, creating concerns for the Federal Reserve, which has been balancing inflation control with employment levels. With inflation trending closer to the Fed’s 2% target and job growth weakening, the central bank faces increased pressure to pivot toward easing.
Impact on Markets and Crypto
Markets reacted swiftly to the labor report, with bond yields dropping and stocks rising on hopes of lower interest rates. The cryptocurrency market also saw a slight boost, as rate cuts could support higher risk asset prices.
As of now, the 75% probability of a rate cut in September indicates a significant signal of a potential shift in Federal Reserve policy in response to the easing economic conditions.
