Global Markets Plummet Amid Weak US Jobs Data and Tariffs

The US employment report for July showed weak job growth, triggering a global stock market selloff and a decline in the US dollar. The report shattered optimism about the US economy and stock market, with investors now expecting a Fed rate cut next month. US President Donald Trump's latest wave of tariffs on 69 trading partners also contributed to the market downturn.

Title: Weak July Jobs Report Sparks Rate Cut Bets and Global Market Selloff

The US employment report for July revealed weak job growth, triggering a global stock market selloff and a decline in the US dollar. The report dashed optimism about the US economy and stock market, with investors now anticipating a Fed rate cut next month. US President Donald Trump's latest wave of tariffs on 69 trading partners also contributed to the market downturn.

The report showed that the US economy added just 73,000 jobs in July, far below the 104,000 expected by economists [1]. The bigger surprise came from revisions to the May and June figures, which collectively erased 258,000 jobs, marking the largest two-month downward revision since May 2020. Economists reacted to the report, with Sarah House of Wells Fargo describing it as a "dud" and highlighting broad-based hiring weakness in sectors like manufacturing and retail [1].

The unemployment rate ticked up to 4.2% in July, in line with expectations and still near historic lows. However, the labor force participation rate fell more than expected, which some economists have linked to President Trump's immigration crackdown. This shift suggests that the jobless rate may have been artificially low due to reduced labor supply [1].

The revised data added urgency to calls for rate cuts from the Federal Reserve. Market pricing shifted notably in the aftermath, with the probability of a September rate cut surging to about 80% [1]. Traders agree, with the CME FedWatch Tool showing an 81% chance of a September rate cut [2]. The tech-heavy Nasdaq fell over 2% by midmorning, the Dow shed nearly 600 points, and the S&P 500 dropped around 1.6% following the report [1].

Bond prices surged on increased rate cut bets, sending the yield on the 10-year Treasury down 11 basis points to around 4.2%. The yield curve also bull steepened, with the gap between two-year and 10-year yields widening to as much as 52.6 basis points [2]. This reflects expectations that the Fed will cut rates soon.

The report also highlighted concerns about the labor market, with manufacturing PMI contracting for the fifth straight month and factory employment hitting a five-year low [2]. The Institute for Supply Management reported that its manufacturing PMI dropped to 48.0 in July from 49.0 in June, indicating contraction in the sector [2].

President Trump's latest tariffs, which targeted 69 trading partners, further added to market concerns. Tariffs on Switzerland, Canada, India, Taiwan, and Brazil contributed to the market downturn [2].

In summary, the weak July jobs report has sparked expectations of a Fed rate cut next month and triggered a global market selloff. The report also highlighted concerns about the labor market and the impact of President Trump's tariffs on the economy.

References:
1. [1] https://finance.yahoo.com/news/a-gamechanger-economists-react-to-weak-july-jobs-report-as-rate-cut-bets-surge-161638670.html
2. [2] https://www.tradingview.com/news/reuters.com,2025:newsml_L6N3TT0PW:0-us-yields-dive-as-job-growth-slows-fed-rate-cut-in-september-seen-likely/