Key facts
- US nonfarm payrolls increased by 162,000 in August, exceeding economists' forecasts.
- The unemployment rate remained unchanged.
- Benchmark U.S. 10-year Treasury yields rose, with two-year yields hitting their highest since January 2025.
- Investor expectations for a Federal Reserve interest rate hike in September increased to approximately 65%.
- Oil prices declined, with U.S. crude down 1.6% and Brent down 1.3%.
U.S. Treasury yields and the dollar climbed on Friday, while the S&P 500 eased, following a robust August jobs report that indicated continued labor market stability. Nonfarm payrolls increased by 162,000 jobs last month, surpassing economists' expectations and holding the unemployment rate steady. This data has bolstered the likelihood of a Federal Reserve interest rate hike at its upcoming September meeting.
Short-term interest rate futures now price in approximately a 65% chance of a rate increase at the Fed's September 15-16 meeting, up from about 55% prior to the report's release. Analysts suggest the Fed views the resilient labor market as a sign that inflation remains a primary concern, making the upcoming consumer inflation (CPI) report crucial for their decision.
In response to the jobs data, the yield on benchmark U.S. 10-year notes rose, and two-year yields reached their highest levels since January 2025. The dollar index, measuring the greenback against a basket of major currencies, also saw an uptick.
Despite the positive jobs figures, major U.S. stock indices presented a mixed picture. The Dow Jones Industrial Average and the S&P 500 registered slight declines, while the Nasdaq composite eked out a small gain. Globally, the MSCI gauge of stocks across the world and the pan-European STOXX 600 index experienced modest increases.
Oil prices, which had recently been elevated due to renewed attacks in the U.S.-Iran conflict, slipped from their highs. U.S. crude fell 1.6% to $89.87 a barrel, and Brent crude lost 1.3% to $94.26 per barrel. Spot gold prices also declined, falling 1.2% to $4,418.09 an ounce.