Jobs triple forecasts, and markets bet on a hike, not a cut

Good morning. Last night's August jobs report blew past expectations. Employers added 162,000 jobs, three times the 53,000 forecast, and the rebound from a negative month fueled the idea that the summer slump was temporary.

The twist is that markets no longer treat a strong economy as simple good news. A stronger economy gives the Fed more reason to raise rates. The odds of a hike at the September 16 meeting jumped to around 58%, and the 2-year Treasury yield reached its highest since January 2025. JPMorgan's strategists, though, still call for no rate change this year, a direct clash with the market.

Stocks bore the brunt. The Dow fell 0.5% and the S&P 500 lost nearly 0.4%, erasing the previous day's relief rally. A record-high US diesel price of $5.85 a gallon and multi-year highs in long-term yields worldwide add to the weight.

President Trump pressed the Fed to cut by threatening to halt trade with countries that run surpluses against the US, though economists warn that would hurt the American economy itself. All eyes now turn to next week's August consumer price report.