Initially: Strong Data, "Hawkish" Signal

In early June, the May Nonfarm Payrolls (NFP) report showed an addition of 172,000 jobs, far exceeding expectations. This sparked market concerns because:

· Stubborn Inflation: April inflation recorded at 3.8% (yoy), still above the Fed's target of 2% .
· "Higher for Longer" Fears: Strong data fueled speculation that the Fed would keep interest rates high for longer, or even raise them again (rate hike). In fact, markets had even anticipated a rate hike in September .

Climax: July 2026 NFP Data Far Below Expectations!

All those concerns dissipated after the release of data on Friday, July 3, 2026. US employment added only 57,000 jobs (vs expectations of ~110,000–115,000) . This weak data was actually welcomed by markets because it reduced pressure on the Fed to raise interest rates .

🏦 The Current Situation: The Fed "Wait and See"

Analysts see the Fed tending to remain "quiet" meaning neither raising nor lowering interest rates for now . Why?

· Mixed Signals: Although employment is weak, wages are still growing at 3.5% (yoy) and the unemployment rate fell to 4.2% . This indicates the economy still has inflationary "fire."
· Need More Evidence: It takes more than one weak data point to change policy direction, especially while inflation remains the Fed's main focus .

Effects on the Market (Based on July 3, 2026 Data)

This weak data immediately changed market expectations :

· US Dollar (DXY): Sharp decline from resistance level .
· Bonds (US Treasury): Yields fell, prices rose .
· Stocks: Positive sentiment spread. The Dow Jones even hit a record high as investors were optimistic that interest rates would not rise .

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