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U.S. job growth triggers Fed interest rate expectations to rise

2026-09-05 03:35:53
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U.S. employment growth triggers Federal Reserve interest rate hike expectations

The unexpected rise in U.S. employment data in August has intensified market expectations that the Federal Reserve may raise interest rates by 25 basis points this month. The U.S. Bureau of Labor Statistics reported that employers added 162,000 new jobs last month, significantly exceeding the expected 53,000. This development sparked widespread speculation in the market and influenced financial forecasts.

Employment data pushes up interest rate hike prospects

Strong employment statistics have renewed concerns about continued inflationary pressures. Federal Reserve Governor Michael Barr said he would support raising interest rates if inflation did not quickly show convincing signs of slowing. Currently, the federal funds target rate range is 3.50% to 3.75%, and the 30-year fixed mortgage rate hovers between 6.66% and 6.68%. Inflation remains the focus of policymakers.

Michael Barr asserted that without a rapid and convincing slowdown in inflation, he would support further rate hikes. Federal Reserve Chairman Kevin Warsh also emphasized at the Jackson Hole seminar that policymakers are ready to take action if inflation fails to return to its 2% target. His remarks highlighted the fact that further interest rate hikes remain possible.

Bond yields reflect tensions

New concerns about tensions between the United States and Iran have put additional pressure on markets. Bond yields rose again on Tuesday, with benchmark 10-year Treasury yields reaching their highest level since January 2025. Expectations of tighter financial conditions are affecting the prices of a wide range of asset classes, from stocks to cryptocurrencies.

At such critical moments, as the investment landscape changes, investors are increasingly seeking diversified channels to enter various assets. The trend towards decentralized finance is becoming increasingly evident, with platforms such as 1stepSwap allowing individuals to hold traditional securities such as U.S. stocks, gold and silver directly in their crypto wallets. This innovation promotes the migration of real-world assets to blockchain, instantly providing optimal market prices and eliminating intermediaries.

Trump urges Federal Reserve to cut interest rates

President Donald Trump has renewed his call for the Federal Reserve to lower interest rates in light of strong jobs data. He advocated lowering interest rates on Truth Social, citing the improvement in U.S. credit strength compared to the past as a reason. Trump's comments came against the backdrop of widespread market expectations for interest rate hikes.

Citing stronger national credit, Trump pushed for interest rate cuts and threatened to interrupt trade with deficit countries. Although Trump has historically pressured the Federal Reserve to cut interest rates, the upcoming release of inflation data is expected to play a key role in the central bank's decision-making process. Whether the Fed chooses to raise interest rates or maintain the status quo depends largely on the trend of inflation, which remains the focus of market participants.

The bureau's report exceeded job growth expectations by more than 100,000 jobs.

Michael Barr supports raising interest rates without a rapid inflation slowdown.

The likelihood of the Fed's action depends largely on upcoming inflation data.

Ultimately, the trajectory of inflation will play a key role in shaping the Fed's actions. Financial markets will be closely watching upcoming key economic indicators that will further shed light on the future path of interest rates and broader economic policy.

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