Weak jobs report kills rate-hike fears — load up on bonds and gold before the Fed pivot
June job growth came in at roughly half of what experts expected, which takes the pressure off the Federal Reserve to raise interest rates. That's sending bond prices higher, and gold is holding two days of gains — all while political pressure on the Fed adds fresh uncertainty.
Idea
The June jobs report showed only 57,000 new positions — about half the expected 115,000 — which prompted traders to dramatically scale back expectations for a Fed rate hike. That sent Treasury bonds rallying immediately. When bond yields drop, gold also catches a bid because it becomes more attractive relative to interest-bearing assets. Gold held two straight days of gains on this dynamic. Meanwhile, Trump's public pressure on the Fed adds political risk premium — when central bank independence is questioned, investors tend to rotate into hard assets. This combination of weak data plus institutional chaos is a powerful tailwind for both bonds and precious metals.
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News sources
- Bonds Rally as Weak Jobs Report Dims Fed Rate-Hike Expectations — Bloomberg
- Gold Holds Gains As Weak US Jobs Data Lowers Rate Hike Odds — Bloomberg
- U.S. economy added 57,000 jobs in June, less than expected; unemployment rate at 4.2% — CNBC
- Trump blasts 'hostile' Fed and says Warsh 'has to do what he has to do' on interest rates — MarketWatch