LIVE MARKETS-Could Friday’s jobs report rejigger Fed bets again?

ReutersJul 31, 2025 4:16 PM

S&P 500, Nasdaq advance, but off highs; Dow now ~flat
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US 10-Year Treasury yield falls to ~4.34%

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COULD FRIDAY’S JOBS REPORT REJIGGER FED BETS AGAIN?

Traders pared bets that the Federal Reserve will make two 25 basis point interest rate cuts this year after Fed Chair Jerome Powell on Wednesday declined to hint at a September cut, maintaining that policymakers are concerned about a resurgence in inflation.

Friday’s jobs report for July may next decide whether traders will start rebuilding bets for more interest rate cuts, if the data shows a labor market that is deteriorating faster than people expect.

Steve Englander, head, global G10 FX research and North America macro strategy at Standard Chartered Bank NY Branch, says the following data points could lead to a reconsideration of Fed policy:

If the unemployment rate unexpectedly rises to a new cycle high of 4.3%.
If the employment to population ratio keeps falling, even if the unemployment rate is stable.
If job gains are well below the expected 104,000, “and the market has to decide if NFP should be so readily dismissed.”
Or on the upside, if the unemployment rate is stable or falling and job gains come in at around 150,000, then “markets have to decide if the 112bps of cuts through end-2026 is realistic.”

Fed funds futures traders are currently pricing in 34 basis points of rate cuts by year-end, down from around 44 basis points before Wednesday’s Fed statement.

(Karen Brettell)

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