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Monday 4 August, 2025
AREA: Finance
Market Wrap: Friday’s Jobs Miss & Trump Tariffs Trigger Global Selloff – Rate Cut Bets Surge Ahead of Thin Summer Trading
Friday, August 2, 2024 | Morning Market Pulse
A perfect storm of weak U.S. labor data, fresh trade tensions, and escalating geopolitical rhetoric sent global markets into a tailspin on Friday, as investors scrambled to price in a dramatically shifting macro outlook. The combination of a dismal August jobs report and President Donald Trump’s surprise executive order imposing new tariffs on key allies — including Canada, Brazil, India, and Taiwan — ignited a broad risk-off move that rocked equities, hammered the dollar, and sent bond yields plunging.
📉 Wall Street Tumbles on Weak Jobs Data & Tech Woes
S&P Closed at 6,238 point on Friday 1st August 2025
U.S. stocks closed sharply lower after the Labor Department reported far weaker-than-expected job growth, reinforcing concerns about economic momentum. The Dow Jones plunged 604.56 points (-1.37%) to 43,526.42, while the S&P 500 dropped 112.80 points (-1.78%) — its worst day since May — closing at 6,226.59. The tech-heavy Nasdaq fared even worse, sliding 512.52 points (-2.43%) to 20,609.93, weighed down by an uninspiring outlook from Amazon and broader sector-wide profit-taking.
Volatility returned with a vengeance. The CBOE Volatility Index (VIX) spiked to 20.95, its highest level since June 23, reclaiming the 20-mark for the first time since April — a clear signal that investor anxiety is resurfacing.
📉 Treasuries Surge as Fed Cut Bets Skyrocket
The weak jobs print lit a fire under bond markets, with traders rapidly repricing expectations for Federal Reserve easing. U.S. Treasury yields collapsed, especially at the front end of the curve, triggering an aggressive bull steepening.
- The 2-year yield — most sensitive to rate expectations — plummeted 27.5 bps to 3.682%
- The benchmark 10-year yield sank 15.8 bps to 4.216%, its lowest level in over a month
The move reflects a sharp pivot in market sentiment: just weeks after the Fed signaled a "higher for longer" stance, Fed-dated OIS now prices in 60 bps of total easing across the remaining three 2024 FOMC meetings, up from just 32 bps Thursday. The September meeting alone now implies ~22 bps of rate cuts, compared to only 9 bps previously.
💸 Dollar Tumbles, Yen & Euro Rally
The U.S. dollar took a beating as rate cut expectations surged. The DXY Index crashed to 98.90, its lowest in over two months, erasing nearly all gains since the last FOMC meeting.
- JPY led the charge, jumping to 147.75/USD, boosted by plunging U.S. yields
- EUR rebounded sharply to 1.1555, finding strong support near the 1.1400 level
- GBP climbed to 1.3257, while CHF strengthened to 0.8065
- Commodity currencies like AUD (0.6485) and NZD (0.5908) posted gains, though equity weakness capped upside
In Asia, SGD (1.2898), THB (32.50), and TWD (29.777) all strengthened, while IDR held steady near 16,485. Meanwhile, CNH recovered to 7.1930, reflecting some relief in offshore sentiment.
⚠️ Trump’s New Tariffs Add Geopolitical Fire to the Mix
Just hours before a key tariff deadline, President Trump signed an executive order imposing new duties on imports from several major trading partners. The move, aimed at pressuring countries into "better deals," has reignited trade war fears and added to global policy uncertainty — particularly damaging at a time when global manufacturing remains fragile.
Adding to the tension, Trump announced the deployment of two U.S. nuclear submarines in response to “provocative” comments from former Russian President Dmitry Medvedev, stoking geopolitical fears. Safe-haven demand surged as a result.
🏦 Safe Havens Shine: Gold Soars, Crypto Crumbles
Gold is at 3,419 US at the moment of this post.
With risk aversion rising and the dollar weakening, gold (XAU) rallied to $3,350 per ounce, its highest in weeks, supported by both monetary and geopolitical tailwinds.
In contrast, cryptocurrencies sold off sharply:
- Bitcoin (BTC) dropped to $114,815
- Ethereum (ETH) fell to $3,547
The move highlights a return to traditional risk dynamics — when volatility spikes and liquidity tightens, digital assets often see outflows.
🌍 Global Manufacturing Still Struggling, Liquidity Set to Thin
As we enter September, the global growth picture remains cloudy:
- Asia’s factory activity continues to deteriorate amid tariff uncertainty
- U.S. manufacturing remains in contraction territory
- Eurozone PMIs show signs of stabilization but still point to contraction
Compounding the uncertainty, August is peak summer holiday season in both Europe and North America, meaning market liquidity will remain thin — increasing the risk of exaggerated moves and choppy trading conditions.
With the VIX back above 20, and rate expectations in flux, next week could be volatile, especially with no major U.S. data until later in the month.
🔮 Bottom Line: The Fed’s September Pivot in Focus
Friday’s market action was a stark reminder that the Fed is never far from the headlines. A single weak jobs report — combined with escalating policy risks — was enough to force a dramatic shift in rate expectations.
All eyes now turn to:
- Incoming data (especially inflation and labor market updates)
- Fed speaker commentary in the coming days
- Global trade developments amid new tariff threats
One thing is clear: the September FOMC meeting is no longer a formality. Markets are now fully pricing in a meaningful chance of a cut — and possibly the start of a new easing cycle.
Buckle up. The calm of summer may be over.
That’s all for now my friends!
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