Confidence in Federal Reserve Chair Jerome Powell has plummeted following a disappointing U.S. jobs report that shattered the narrative of a “resilient labor market” he promoted earlier this week. Markets reacted swiftly, with expectations for a September interest rate cut surging.

The latest data revealed only 73,000 nonfarm payroll jobs added in July, well below the 110,000 anticipated by analysts. Revisions to prior months were even more alarming: June’s job count was revised down from 147,000 to 14,000, and May’s from 144,000 to 19,000, erasing 258,000 jobs—roughly the population of Scottsdale, Arizona. The unemployment rate also ticked up to 4.2%, aligning with forecasts but undermining Powell’s claim of a “strong” labor market.

Markets Pivot: Rate Cut Now Likely

The reaction was immediate. The CME FedWatch Tool now shows a 75.5% chance of a September rate cut, up from 40% just a day prior. Kalshi’s prediction market aligns, assigning a 75% probability to a rate cut at the next FOMC meeting. Bond markets echoed the shift, with the two-year Treasury yield dropping 15 basis points to 3.80% and the ten-year yield falling 8 basis points, signaling an impending policy change.

Trump Slams Powell: “Cut Rates Now!”

Former President Donald Trump seized the moment, blasting Powell on Truth Social as “a disaster” and demanding immediate rate cuts. “Too little, too late. Jerome ‘Too Late’ Powell is a disaster. CUT RATES! The good news is, tariffs are bringing billions into the USA!” he wrote.

What’s Really Happening?

The data suggests two troubling possibilities: either the U.S. labor market is slipping toward recession, or the Bureau of Labor Statistics’ numbers are so unreliable that 258,000 jobs vanished in revisions. Neither inspires confidence. The first points to economic distress; the second implies no one truly understands the economy’s state. Regardless, markets now see a September rate cut as nearly certain.

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