U.S. Economy Unexpectedly Sheds 23,000 Jobs in July, Dampening Fed Rate Hike Expectations

The U.S. economy unexpectedly lost 23,000 jobs in July, with previous job gains for May and June also revised sharply lower by 103,000. This weaker-than-expected employment report from the Labor Department's Bureau of Labor Statistics has significantly tempered financial market expectations for an interest rate hike from the Federal Reserve next month. The unemployment rate fell to 4.1% from 4.2%, primarily because 264,000 people left the labor force. Wage growth also slowed to 3.2% year-on-year. In response, Wall Street stocks rallied, and Treasury yields declined, with the benchmark 10-year Treasury note yield falling to 4.63% from 4.67% and the two-year Treasury yield dropping to 4.19% from 4.22%. Economists noted that much of the decline was concentrated in local government education and leisure and hospitality, suggesting some seasonal factors may be at play.