Corpay Chief Market Strategist Karl Schamotta noted that the July US employment report came in well below market expectations, significantly scaling back expectations that the Fed would move to raise rates at the September FOMC meeting. Nonfarm payrolls fell by 23,000 month-on-month, far short of the forecast 80,000 increase, and the previous two months were revised down by a combined 103,000. The unemployment rate edged down to 4.1 percent, but that reflected a decline in the labor force participation rate, while average hourly earnings growth slowed to a 0.1 percent month-on-month rise. The dollar fell across the board and Treasury yields declined, but he said the situation could still change ahead of the next FOMC meeting, with multiple inflation readings and the August jobs report still to come.
Weak jobs report reduces Fed rate hike expectations, leading to lower Treasury yields.
