Soft Payrolls Cool Fed Hike Bets as Yields Fall
A weak June jobs report, softer GDP tracking, and easing manufacturing price pressures pushed investors away from another near-term Fed hike. Treasury yields fell, stocks firmed early, and the dollar weakened as markets read the data as slower growth without a full labor-market breakdown.
The past week in U.S. economic data told a simple story: growth cooled, inflation pressure eased at the margin, and the labor market lost some momentum without breaking. That mix mattered because it pushed investors away from the idea of another near-term Fed hike. June payrolls rose by only 57K, the Atlanta Fed’s GDPNow estimate for Q2 dropped to 1.2% from 2.5%, and ISM manufacturing prices fell to 73.0 from 82.1. At the same time, jobless claims stayed low, manufacturing remained in expansion, and mortgage rates drifted lower rather than collapsing. In plain English, the economy looked less overheated, but not distressed. Markets treated that as a reason to trim rate fears, sending Treasury yields lower, lifting stocks early, and pressuring the dollar.
