August 1, 2025 — A disappointing U.S. jobs report for July has cast serious doubt on Federal Reserve Chair Jerome Powell’s claims of a "strong labor market," triggering immediate market reactions and significantly raising expectations for a rate cut in September.

According to the Bureau of Labor Statistics (BLS), nonfarm payrolls rose by just 73,000 last month, falling well short of economists’ projections of 100,000. Even more concerning were sharp downward revisions to previous months: June’s job gains were slashed from 147,000 to 14,000, and May's figures were revised down from 144,000 to just 19,000. In total, 258,000 jobs were erased from earlier estimates, wiping out more jobs than the entire population of Scottsdale, Arizona.

Meanwhile, the unemployment rate edged up to 4.2%, in line with forecasts but still reflecting a softening in the labor market. The report dealt a major blow to Powell’s recent assertion—made just two days prior—that the U.S. labor market remained robust.

Markets Rapidly Shift Expectations

Wall Street wasted no time in reacting. The CME FedWatch Tool now shows a 75.5% probability of a Fed rate cut in September, a sharp jump from just 40% the day before. Kalshi prediction markets mirrored the shift, also pricing in a 75% chance that the Fed will ease monetary policy next month.

Bond markets moved swiftly as well. The 2-year Treasury yield dropped 15 basis points to 3.80%, while the 10-year yield slipped 8 basis points. The moves indicate growing confidence that the Fed will be forced to pivot.

Fed Credibility in Question

The stark reversal in job figures has not only undermined the Fed’s messaging but also raised broader concerns. Analysts now see two troubling possibilities: either the U.S. labor market is quietly slipping into a recession, or BLS data collection is failing to capture real employment trends. Both scenarios suggest uncertainty ahead.

Former President Donald Trump seized on the opportunity to criticize Powell once again, posting on Truth Social: “Too Little, Too Late. Jerome ‘Too Late’ Powell is a disaster. DROP THE RATE!” He also pointed to tariffs as a continued source of revenue, saying they are “bringing billions of dollars into the USA.”

As speculation mounts and confidence in the Fed’s messaging wanes, all eyes are now on the central bank’s next policy meeting in September—where a rate cut is no longer a possibility, but increasingly s

#TrumpTariffs $BTC een as inevitable.