Overview

• Traders are pricing in an 87.8 percent chance of a 25-basis-point cut in September after U.S. employers added just 73,000 jobs in July, far below expectations.
• Fed Presidents Mary Daly and Neel Kashkari have indicated that the recent labor-market cooling likely warrants policy easing in the coming months.
• Morgan Stanley’s Michael Gapen and Bank of America’s Aditya Bhave argue that persistent inflation above the 2 percent target and a still-balanced labor market counsel against immediate rate reductions.
• At its late July meeting, the Federal Open Market Committee held its policy rate at 4.25–4.50 percent, with two voters dissenting in favor of cuts.
• U.S. equity markets tumbled after the weak jobs data as investors feared the slowdown could tip the economy into recession.