Yields dip on weak jobs report. Treasury yields plummeted 7-9 bps in the immediate aftermath of this morning’s softer-than-anticipated nonfarm payrolls print, though the move gradually reversed over the remainder of the session as markets further digested the data. The 2-year yield ultimately closed 5 bps lower at 4.20% (down 10 bps on the week), while the 10-year yield closed 3 bps lower at 4.65% (down 9 bps on the week). Meanwhile, equities rallied on the weak labor data and revived hopes for a Hormuz deal, driving the S&P 500 and NASDAQ to close 0.62% and 1.30% higher, respectively.
Weak payroll report ignites labor market concerns. Today’s nonfarm payrolls report showed 23k jobs lost in July, a sharp decline from the 80k gain anticipated and below June’s downwardly revised 20k jobs added. May and June’s figures saw a combined downward revision of 103k jobs. Government, and leisure and hospitality were the main contributors to July’s weak report, shedding 53k and 40k jobs, respectively. The unemployment rate fell slightly to 4.1% from 4.2% in the previous month, as the labor force participation rate fell to its lowest level since the COVID-19 pandemic, with 264k individuals leaving the labor force. Today’s report eased market expectations of a September rate hike, with a slowing job market now at odds with elevated inflation risks.
US reported to remove naval blockade once Iran-Oman deal is announced. President Donald Trump said today that talks to reopen the Strait of Hormuz are “moving along,” though he provided no additional context. Earlier in the week, Iran said an agreement with Oman was reached “in principle,” but details are to be finalized and announced “soon.” It also remains unclear whether Iran’s Supreme Leader has approved of the proposal, with Iranian officials recently saying that he is “difficult to contact.” Meanwhile, an US official shared today that, “Once the deal is announced to restore commercial shipping without impediments, the United States will lift the blockade of Iranian ports.”