Fed Rate-Hike Expectations Ease After Weak July Jobs Report

Expectations for the Federal Reserve's policy path shifted after a softer-than-expected July U.S. jobs report. Employers added 73,000 jobs, well below market forecasts, prompting investors to reassess the outlook for interest rates. Rates markets now imply roughly an 80% chance of a rate cut in September, up from about 40% a day earlier, as signs of a cooling labor market fuel expectations of easier policy rather than additional tightening. Advertisement Further out, market pricing still assigns a low probability to a "YES" outcome for a rate cut by the Fed's September 2026 meeting, at 5.5%. Even so, the latest data has reinforced a broader shift away from rate-hike bets. Investors will keep a close eye on upcoming readings tied to employment, inflation, and growth, along with any guidance from Fed Chair Jerome Powell and the Federal Open Market Committee (FOMC), for clues on whether the recent dovish repricing has room to run. Key Takeaways - Markets are dialing back expectations for additional Fed rate hikes after weaker-than-expected July payrolls. - Pricing points to a higher probability of a September rate cut, reflecting a more dovish tilt. - The repricing underscores a reassessment of monetary policy as labor market momentum appears to cool. What to Watch - Comments from Jerome Powell or the FOMC that clarify the near-term rate outlook. - Upcoming inflation and employment data that could reshape market expectations. - Any surprise shifts in these indicators that could move the odds of rate adjustments. Get prediction market intelligence as a structured API feed. Early access waitlist.