US Non-Farm Payroll for July and revision for May & June are weak and not even half of normal job creation but that could be a tariff-related problem and can improve sharply these 2-3 months as confidences are recovering on lower tariff. Besides payroll report, most other job data such as the 4.2% jobless rate or initial jobless claims are robust and paint a still-solid employment market despite some slowdown. Also, last Wednesday US GDP 2Q2025 3.0% growth is higher than both market forecast & long-term average. So, while one job data was bad, overall growth outlook of US economy remains positive.
Fed’s FOMC meeting statement & press conference last Wednesday disappointed the market without the slightest hinting of a September cut. Instead, Powell repeats that they will vote & decide only in the September meeting and does not indicate any inclination to ease. Also, Fed’s high confidence on job market had the market worried that it may not see need of a cut soon. However, should inflation further drop gradually as per my forecast in next 6 weeks, September cut is still quite possible. Before end 2025, monetary easing could resume with 1 or 2 quarter-point reduction(s) and follow by another 0.25% cut in 2026 to boost bond & stock prices.
