The U.S. labor market exhibited significant weakness in July, as the economy added a mere 114,000 jobs, accompanied by a spike in the unemployment rate to 4.3%, according to data released by the Bureau of Labor Statistics.

Disappointing Employment Figures

The 114,000 job additions fell substantially short of the anticipated 175,000 and marked a decline from June’s revised total of 179,000, initially reported as 206,000. The unemployment rate’s rise to 4.3% from June’s 4.1% also surpassed projections of a steady 4.1%.

Market Reactions and Economic Indicators

Bitcoin (BTC) prices remained relatively stable following the labor report, trading at approximately $64,500, showing minimal change over the past 24 hours. In contrast, traditional financial markets exhibited more pronounced reactions. The 10-year Treasury yield plummeted 15 basis points to 3.83%, and the two-year yield dropped 23 basis points to 3.93%, both hitting their lowest levels in over a year. Stock market futures also responded negatively, with Nasdaq futures declining 2.3% and S&P 500 futures falling 1.6%.

The dollar depreciated by 0.6%, while gold prices surged 1.3% to a record high of $2,513 per ounce, reflecting increased investor demand for safe-haven assets.

Wage Growth and Hours Worked

Average hourly earnings in July rose by 0.2%, below the expected 0.3% increase and down from June’s 0.3% rise. On an annual basis, average hourly earnings climbed 3.6%, missing the forecast of 3.7% and lower than June’s 3.8%. Additionally, average weekly hours worked fell to 34.2, missing expectations of 34.3 and down from June’s 34.3.

Federal Reserve Rate Cut Speculations

With a 25 basis point Federal Reserve rate cut in September already priced in, traders are now increasingly anticipating a larger move. According to CME FedWatch, the probability of a 50 basis point cut in September has surged to 70%, up from 22% just a day earlier. For the December meeting, traders are beginning to bet on a cumulative 125 basis points in rate cuts by year-end, a notable increase from the previously overwhelming odds of just 75 basis points in cuts for 2024.