Global stocks bounce as weak jobs data slam bond yields and revive risk appetite

On August 7, the U.S. July jobs report delivered a negative surprise, showing a contraction in payrolls instead of the modest growth economists had expected. The data sparked a sharp rally in Treasuries, with the 10‑year yield dropping roughly seven basis points to around 4.6%. Because long‑term government bond yields are a key discount rate for valuing future earnings, this sudden move lower acted as a tailwind for risk assets, helping global equities rebound after several choppy weeks.

In the run‑up to the report, investors had been on edge. Rising geopolitical tensions around the Strait of Hormuz had pushed oil prices and bond yields higher, at times dragging longer‑dated U.S. yields toward the 5% area and capping equity gains. The weaker‑than‑expected labor data relieved some of the pressure, tempering fears that the Federal Reserve might have to resume rate hikes. Rate‑sensitive growth names, small caps and other riskier segments of the market led the advance, while defensive bond‑proxies lagged.

Still, softer employment is also a potential warning sign for the broader economy. The key question for investors is whether this move marks the start of a durable risk‑on phase or just a short‑covering bounce in a late‑cycle environment. Upcoming inflation releases and Fed communication will be critical in determining whether markets can pivot toward a clearer rate‑cut narrative, or whether the “higher for longer” regime on yields simply takes a brief pause before reasserting itself.