Markets Roiled as US Payrolls Miss Eclipses Trump's Latest Fed Salvo
A highly anticipated U.S. employment report delivered a shock on Friday: the world’s largest economy lost 23,000 non-farm jobs in July, confounding the consensus forecast of an 80,000 gain. The unemployment rate edged down to 4.1%, but the headline figure was enough to rattle currency, bond and commodity markets.
The dollar index slid 0.53% to 99.4, its lowest in weeks, while the euro firmed 0.5% and the Japanese yen jumped 1.1%. Yields on 10-year Treasuries fell nearly 8 basis points to 4.60%, even as money markets continued to price one more Federal Reserve rate hike this year.
The data landed in an already febrile political atmosphere. President Donald Trump, asked if he would push Fed Chair Warsh for rate cuts before November’s midterms, repeated that rates “should come down” but conceded the decision was not Warsh’s alone. The White House separately indicated that Trump plans to fire Fed Governor Cook, reviving a plan previously blocked by the Supreme Court.
Elsewhere, spot gold surged more than 3% to a record $4,371.89 an ounce, while Brent crude rose 1.3% to $83.55 after the U.S. Senate overwhelmingly passed broad sanctions on Russia’s energy sector. Hong Kong’s Hang Seng Index looked set for a positive start, with ADR signals pointing 231 points above the previous close, as heavyweight stocks such as Alibaba and HSBC gained in overseas trading.
Behind the Moves: What the Jobs Print and Political Drama Mean for Investors
A Payroll Miss That Unravels Rate-Hike Bets
The 23,000 decline, the first negative print in months, challenges the narrative of a resilient labour market. Even though the unemployment rate actually improved, the miss punctured the dollar’s momentum and sent bond yields lower. However, fed funds futures still show traders assigning a meaningful probability to one more hike this year, suggesting the market is reluctant to abandon the tightening story entirely.
Trump’s War on the Fed Enters a New Phase
The twin developments — pressure on Warsh to cut rates and the renewed attempt to dismiss Governor Cook — underscore the increasing politicisation of the central bank. While White House adviser Hassett insists Trump has not directly advised Warsh on rates, the planned firing, if pursued, could test the limits of presidential authority over independent agencies. For markets, it adds an unpredictable layer of political risk to the rate outlook.
Gold’s Record Run Has Multiple Engines
The rally that took bullion above $4,370 is more than a knee-jerk reaction to a softer dollar. Geopolitical tensions are rising again — the Senate’s Russia energy sanctions, stalled US-China defence dialogues — while central banks have been diversifying reserves away from the dollar. Reports that the People’s Bank of China has increased gold holdings in Hong Kong to anchor a new gold-trading hub added to the bullish sentiment.
Yen Stabilisation Squeezes Shorts
Japan’s Finance Minister Katayama signalled that coordinated action with the U.S. would be used again if needed. The threat appears credible: after the last intervention, hedge funds halved their short yen positions in a week, data showed. The yen’s 1.1% gain on Friday reflects a market that is wary of being caught on the wrong side of further official action.
Oil Climbs on Sanctions Momentum
The 86-11 Senate vote on Russian energy sanctions, now heading to the House, raises the spectre of further supply constraints. That, together with steady equity fund inflows — EPFR data showed $32.9 billion poured into global stock funds in the week to 5 August — helped push crude and the pan-European Stoxx 600 to an all-time intraday high.
Hong Kong Property and Corporate Moves
Locally, the Centa-City Leading Index of second-hand home prices slipped 0.06% to 159.82, a second weekly decline. Yet new project launches, such as Wheelock’s PALO SPRINGS in Kwu Tung North with an average price of HK$17,671 per square foot, signal developer confidence. On the corporate front, HSBC sold its Tokyo headquarters building but continues to lease space there, while HSBC research upgraded its 2026 Hong Kong GDP forecast from 3.8% to 4.5%.
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