The US economy added just 73,000 jobs in July, while the unemployment rate rose to 4.2%—a development the CEO of global financial advisory giant deVere Group says puts the Federal Reserve firmly back on the path toward cutting rates in September.
Markets had expected a modest gain of 100,000, but the figure fell short—and was compounded by a staggering 258,000 downward revision to May and June payrolls.
Treasury yields dropped and stock futures declined sharply following the report, as traders moved to price in a 63% chance of a rate cut next month, up from just 40% the day before.
“This report is a major red flag,” says Nigel Green. “The headline miss is bad enough. But the real story is the scale of the revisions. The jobs market isn’t just slowing—it has been much weaker than anyone realised.”
The June payroll total was slashed from 147,000 to just 14,000. May’s number was cut from 144,000 to 19,000. Combined, these revisions erase more than a quarter million jobs that had been counted in.
“This likely changes the Fed’s calculus,” he notes. “The data the central bank had been relying on has now been invalidated. There’s a clear shift in labour market momentum, and it justifies fresh action.”
With inflation easing and now jobs growth faltering, pressure is building on the Fed to cut rates when it meets in September. Fed Chair Jerome Powell has said repeatedly that decisions will be driven by incoming data.
“This is exactly the kind of data that forces a policy response,” explains the deVere CEO. “The Fed is trying to keep the economy in balance. But it’s now clear that the labour market is out of step with expectations. This likely requires movement.”
Yields across the curve fell on the news, and investors reallocated into rate-sensitive sectors. The dollar also pulled back slightly as markets priced in a more dovish Fed trajectory.
“Investors are already repositioning,” says Nigel Green. “The Fed now has the evidence it needs to act, and the market is aligning with that view fast.”
He adds: “This jobs report will likely be the turning point that tilts the balance decisively in favour of a September cut. That’s what markets are telling us.
“Policy is about to get looser. This can be expected to drive rotation. There are opportunities emerging, particularly in tech, growth stocks, and emerging markets. But selectivity will be essential.”
The next Federal Reserve meeting is scheduled for mid-September, with one more jobs report due before then. But barring a dramatic rebound, Nigel Green says the course is already set.
“The jobs market just gave the Fed a green light. They’re likely to take it.”
