{"id":52727,"date":"2025-09-05T09:08:41","date_gmt":"2025-09-05T13:08:41","guid":{"rendered":"https:\/\/stockmarketwatch.com\/stock-market-news\/us-jobs-report-misses-mark-igniting-fed-rate-cut-expectations-canadian-labor-market-also-weakens\/52727\/"},"modified":"2025-09-05T09:08:41","modified_gmt":"2025-09-05T13:08:41","slug":"us-jobs-report-misses-mark-igniting-fed-rate-cut-expectations-canadian-labor-market-also-weakens","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/us-jobs-report-misses-mark-igniting-fed-rate-cut-expectations-canadian-labor-market-also-weakens\/52727\/","title":{"rendered":"US Jobs Report Misses Mark, Igniting Fed Rate Cut Expectations; Canadian Labor Market Also Weakens"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong>US Nonfarm Payrolls<\/strong> significantly underperformed expectations in August, increasing by only <strong>22,000<\/strong> against a forecast of <strong>75,000<\/strong>, indicating a pronounced cooling in the labor market.<\/li>\n<li>The soft US jobs data has dramatically increased market bets on <strong>Federal Reserve rate cuts<\/strong>, with short-term interest-rate futures reflecting a <strong>97% probability<\/strong> of a September reduction.<\/li>\n<li><strong>Canada&#39;s employment figures<\/strong> also disappointed sharply, with a <strong>loss of 65,500 jobs<\/strong> in August, pushing the likelihood of a <strong>Bank of Canada September rate cut to 90%<\/strong>.<\/li>\n<li>In response, <strong>US Treasury yields fell<\/strong> and the <strong>2\/10 yield curve steepened to 60.4 basis points<\/strong>, while <strong><a href=\"https:\/\/stockmarketwatch.com\/markets\/sp500\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"snp500 today\">S&amp;P 500<\/a> futures (<a href=\"\/stock\/SPX\">SPX<\/a>) saw a modest rise of 0.3%<\/strong>.<\/li>\n<li>The <strong>UK 10-year gilt yield eased to 4.70%<\/strong>, reflecting broader bond market movements.<\/li>\n<\/ul>\n<p>The latest August jobs report from the U.S. Bureau of Labor Statistics revealed a significantly weaker labor market than anticipated, with nonfarm payrolls rising by a mere <strong>22,000<\/strong>. This figure sharply missed economists&#39; expectations of <strong>75,000<\/strong> new jobs and was a notable decline from July&#39;s revised <strong>73,000<\/strong> gain, signaling a pronounced slowdown in hiring. Private payrolls also showed weakness, increasing by just <strong>38,000<\/strong> compared to an estimated <strong>75,000<\/strong>. The unemployment rate, however, rose as expected to <strong>4.3%<\/strong> from <strong>4.2%<\/strong> in July.<\/p>\n<p>This unexpectedly soft jobs data has intensified market speculation for more aggressive monetary easing from the Federal Reserve. Traders are now pricing in a <strong>97% chance<\/strong> of a <strong>25-basis-point<\/strong> rate cut at the upcoming September Federal Open Market Committee (FOMC) meeting, a significant increase from <strong>75%<\/strong> before the release of the US jobs data. Average hourly earnings grew by <strong>0.3%<\/strong> month-over-month, remaining flat with the previous period, while the year-over-year increase slowed slightly to <strong>3.7%<\/strong> from <strong>3.9%<\/strong>. The labor force participation rate saw a marginal uptick to <strong>62.3%<\/strong>.<\/p>\n<p>The impact was immediately felt across financial markets. <strong>US Treasury yields rose<\/strong> following the soft report, with the <strong>10-year Treasury yield<\/strong> easing to <strong>4.154%<\/strong> and the <strong>2-year yield<\/strong> falling to <strong>3.53%<\/strong>. The <strong>US Treasury 2\/10 yield curve steepened to 60.4 basis points<\/strong> as investors reacted to the shifting rate cut expectations. Meanwhile, <strong>S&amp;P 500 futures (<a href=\"\/stock\/SPX\">SPX<\/a>)<\/strong> saw a modest gain of <strong>0.3%<\/strong> after an initial brief dip, reflecting investor optimism for potential rate cuts to stimulate the economy.<\/p>\n<p>Across the border, Canada&#39;s labor market also delivered a significant disappointment in August. The economy experienced a substantial <strong>loss of 65,500 jobs<\/strong>, a stark contrast to the estimated <strong>5,000<\/strong> gain. This pushed the Canadian unemployment rate up to <strong>7.1%<\/strong>, exceeding the <strong>7.0%<\/strong> forecast and rising from <strong>6.9%<\/strong> in July. In response to this weakness, the Canadian swap market is now indicating a <strong>90% chance<\/strong> of a <strong>September rate cut<\/strong> from the Bank of Canada, a sharp increase from <strong>75%<\/strong> prior to the release of the US jobs data.<\/p>\n<p>In the United Kingdom, the <strong>10-year gilt yield<\/strong> eased to <strong>4.70%<\/strong> on September 5, marking a <strong>0.03 percentage point decrease<\/strong> from the previous session. This movement aligns with broader trends in global bond markets reacting to the fresh economic data and central bank expectations.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways US Nonfarm Payrolls significantly underperformed expectations in August, increasing by only 22,000 against a forecast of 75,000, indicating 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