Soft US jobs data rekindles Fed rate‑cut bets, jolting stocks, bonds, the dollar and gold

On August 2, the US Labor Department released July employment figures showing non‑farm payroll growth below consensus forecasts, alongside a slight uptick in the unemployment rate. Wage gains also cooled modestly, reinforcing the view that inflation pressures are gradually easing and pushing expectations for Federal Reserve rate cuts back to the forefront.

Fed funds futures — derivatives that reflect where traders think policy rates are headed — moved quickly to price in at least two cuts by year‑end. US 10‑year Treasury yields dipped in response, boosting growth‑oriented equity indices such as the Nasdaq, while bank stocks and other rate‑sensitive financials lagged.

In currency markets, the dollar weakened against major peers as lower US yields eroded its relative appeal, prompting a modest rebound in the euro and yen. Gold futures, which are priced in dollars and compete with bonds as a “safe” store of value, firmed on the combination of a softer greenback and falling yields, drawing renewed attention to the metal’s role as both a defensive asset and an inflation hedge.

Investors are now refocusing on upcoming inflation data and speeches from Fed officials. The key question is whether the central bank can deliver rate cuts without triggering a sharper economic slowdown — a delicate balance that will drive cross‑asset moves in the weeks ahead.