Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

NFP React: What Economic Slowdown?

By MarketPulse (Craig Erlam)Market OverviewAug 05, 2022 01:19PM ET
NFP React: What Economic Slowdown?
By MarketPulse (Craig Erlam)   |  Aug 05, 2022 01:19PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

The July nonfarm payroll report delivered a juicy plot twist in Wall Street’s Fed pivot playbook. Stubbornly high inflation and a global economic slowdown were expected to drag down the US economy, but after today’s jobs report, that does not seem to be the case. Fed officials were already pushing back on the idea of a Fed pivot, and now it seems they will be debating whether they need to be even more aggressive to tackle inflation given how strong the labor market is performing.

US stocks plunged after robust employment sent Fed rate hike expectations higher. The stock market was too optimistic in feeling confident the Fed only had a full point in rate hikes left in them before they would keep rates steady.


This nonfarm payroll report was a game-changer for Wall Street. Robust job growth and accelerated wage gains confirm the US economy is not in a recession and paves the way for continued massive rate increases. The labor market is still very tight after nonfarm payrolls surged 528,000 in July, more than doubling economists’ expectations. The unemployment rate ticked lower to 3.5% as labor participation continued to dip. Wages continue to rise, and that will further fuel inflation worries. Employment is back to pre-pandemic levels, and it looks like it will not stop there.

A September Fed pivot is completely off the table, and the risks of a full-point rate hike could grow if the next two inflation reports remain hot.


The reaction to a shockingly impressive payroll report was a surge in Treasury yields that bolstered the dollar. King dollar is here to stay as the debate for higher Fed rate increases will likely be supported by the next round of inflation data. The euro defended parity against the dollar, but it will be hard for that to last as the interest rate differential will continue to widen more to the greenback’s favor and as the global economic slowdown will lead to more safe-haven flows.


Oil prices are finishing on a strong note after a week filled with global recession fears destroyed the crude demand outlook. A robust nonfarm payroll is welcome news for the US economy—and that is helping oil pare some of this week’s losses. Europe also posted better-than-expected industrial production data from both Germany and France. Despite all the global economic slowdown worries, the oil market is still tight.

A surging dollar and rising risk that the Fed may need to be more aggressive with the tightening of monetary policy are unnerving some energy traders. With Saudi Arabia and the UAE saving their emergency oil capacity, further downward pressure might be limited. The oil market remains tight, and if today’s bounce off major technical support (200-day SMA) lasts, prices could stabilize above the $90 level.


Gold’s rally might be over now that Wall Street needs to have a reset with their Fed rate hiking expectations. The July nonfarm payroll report was a shocker that has sent Treasury yields soaring, which is kryptonite for non-interest-bearing gold. The next couple of weeks will truly test if gold is a safe haven again. Bullion traders now have two big questions: How much higher will the Fed take rates? Can gold rally alongside a strengthening dollar?

The next inflation report will be key for determining if a 75-basis point rate hike will fully be priced in, but if we see a much hotter-than-expected report, some might argue for a full point at the September FOMC meeting.


Bitcoin might be ending its correlation with equities. After a robust nonfarm payroll report, Wall Street sent Treasury yields skyrocketing, which sent stocks sharply lower, but not Bitcoin. If we were still in a crypto winter, Bitcoin’s typical reaction would have delivered a steeper drop than what happened with US stocks. If Bitcoin can hold onto the $23,000 level, that could be very promising for the medium-term outlook. Bitcoin has been stabilizing here and could see further bullish momentum on the break of the $25,000 level.

NFP React: What Economic Slowdown?

Related Articles

Marc Chandler
Markets Look For Direction By Marc Chandler - Aug 17, 2022

The biggest development today in the capital markets is the jump in benchmark interest rates. The US 10-year yield is up five basis points to 2.86%, which is about 10 bp above...

NFP React: What Economic Slowdown?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
YC Teng
YC Teng Aug 07, 2022 12:54AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Believe US economy is slowing beneath the strong jobs numbers, and inflation will abate from here for the next quarter. Elevated oil prices and supply chain issues been temporarily relieved.Next year will be a tougher call on rates. Fed will have to let the 250 points increment work their way through the system over next quarter.Either 25 points or 50 points increment for soft landing...
David Beckham
David Beckham Aug 05, 2022 10:01PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Not sure the market spike was really about fed pivot but it seems the economy is no as bad people thought also inflation will be here very long and high rate could be stayed but if economy still not that then mega companies still doing good then why not buying stocks of course from macro view it should go downs but ws seem using other excuse to buy
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email