July Nonfarm Payrolls missed estimates by 103K jobs, while easing geopolitical tensions reduced Fed rate hike bets to 30%.
US Treasury yields declined across the curve after July Nonfarm Payrolls added only 23K jobs, well below the 80K forecast. Revisions for May and June subtracted another 103K jobs, reinforcing expectations the Federal Reserve may pause rate hikes in September.
The 10-year Treasury yield dropped nearly 3 basis points to 4.651% as traders priced out tightening risks. Money markets now assign a 30% chance of a September rate hike, down from 58% the prior day. WTI crude fell to $77.50 amid reports of progress in Oman-Iran talks over Hormuz shipping lanes.
The dollar weakened following the jobs report, while the unemployment rate edged down to 4.1%. Markets interpreted the data as dovish for Fed policy, reducing pressure for immediate rate increases.