Core Viewpoint - The July employment data in the U.S. showed a significant decline, with non-farm payrolls increasing by only 73,000, which is below the expected 104,000. Additionally, the data for the previous two months was notably revised downwards by a total of 258,000 jobs [1][5]. Employment Data Analysis - The July employment report indicated a reduction of 10,000 jobs in the government sector, while the private sector added 83,000 jobs, which is below the expected 100,000. The healthcare (+79,000), retail trade (+16,000), and finance (+15,000) sectors were the main contributors to job growth, whereas professional and business services (-14,000), manufacturing (-11,000), and government (-10,000) sectors were the main detractors [3][20]. - The employment diffusion index, which measures the breadth of employment growth, increased to 51.2% in July from 47.2% previously, but the three-month average remains low at 49%, significantly below the projected 53.8% for 2024 [3][20]. Unemployment Rate Insights - The unemployment rate (U3) rose slightly from 4.12% to 4.25% in July, with the rate for new entrants to the job market increasing from 0.42% to 0.58%. The permanent unemployment rate remained stable at 1.11%. Notably, the number of individuals transitioning from employment to unemployment increased significantly, reflecting a weakening trend in household surveys [21][22]. Federal Reserve's Monetary Policy Response - The Federal Reserve decided not to cut interest rates in its July meeting, with two members voting against the decision. The weak non-farm payroll data somewhat supported their stance. Market expectations for a rate cut in September surged, with the probability rising to 80.3% from 37.7% [4][25][26]. - The market reacted negatively to the significant slowdown in non-farm data, raising concerns about the impact of tariffs on the U.S. economy. This led to declines in major stock indices and a drop in U.S. Treasury yields [27].