U.S. Jobs Data Shakes Markets, Fed Rate Cut Expectations Surge

Friday’s U.S. nonfarm payrolls report has flipped the economic narrative. Only 73,000 jobs were added in July—well below expectations—and unemployment rose to 4.2%. Wage growth stalled, and major downward revisions were made to previous months’ data. Markets now price in two 25bp rate cuts from the Federal Reserve this year, with September emerging as a potential starting point.

The dismal jobs report comes amid political tension as President Trump fired the head of the Bureau of Labor Statistics, accusing the agency of manipulating data. This has raised concerns about the integrity of U.S. economic reporting and added a layer of political risk to markets.

ZAR Recovers as USD Staggers Under Political and Economic Pressures

The USD came under pressure following the weak jobs data and growing stagflation fears, helping the ZAR recover from recent losses. The USD-ZAR pair pulled back to around 18.03 from recent highs of 18.41, as declining U.S. bond yields eroded the dollar’s carry trade advantage.

Market participants remain cautious, watching for further tariff developments and any additional signals from the Fed. The week is expected to begin with a more consolidative tone in the currency markets.

South Africa’s Moral Posturing Backfires Amid U.S. Trade Retaliation

South Africa continues to face fallout from its foreign policy choices. The U.S. has yet to respond to SA’s trade proposals after implementing steep tariffs, which now weigh heavily on local businesses. Finance Minister Godongwana has distanced himself from the SARB’s preference for a 3% inflation target, and warned Johannesburg’s municipality over ongoing corruption.

Critics argue SA’s attempts to claim moral leadership on global issues—like taking Israel to court or aligning closely with BRICS+—ring hollow given domestic governance failures, rampant corruption, and crumbling infrastructure. These geopolitical moves, once seen as symbolic, now carry tangible economic costs.

Bond Market Cheers SARB’s Commitment to Low Inflation

Despite Finance Minister Godongwana’s resistance, the bond market has embraced the SARB’s inflation target preference of 3%. Yields fell by nearly 20bps last week, and the trend may continue if the ZAR holds its ground and investors see credible reform signals.

Operation Vulindlela and fiscal reforms led by the National Treasury are seen as critical to complementing SARB’s monetary discipline. However, without broader government alignment, the structural re-rating of South African bonds toward investment grade may remain elusive.

Global Rates: U.S. Yields Tumble on Fed Cut Bets

U.S. Treasury yields plunged Friday, especially at the short end of the curve, reflecting a sudden shift in sentiment. With just 73,000 jobs added and economic momentum slowing, markets now price in two rate cuts for 2025—possibly starting with a 50bp move in September.

Fed Chair Powell has maintained that the labor market is solid, but mounting political pressure and tariff-induced inflation risks are complicating the picture. The 2-year yield fell 16bp in a single day, underscoring the scale of the repricing.

Oil Prices Slip as OPEC+ Reverses 2023 Cuts

OPEC+ has fully reversed its 2023 oil production cuts, adding 547,000 barrels per day to global supply. However, the fate of an additional 1.66 million bpd remains uncertain. While Trump has called for lower oil prices, internal OPEC+ dynamics—especially involving Russia—remain tense.

Crude prices fell sharply, with Brent down nearly 4% on Friday, and markets now fear a supply glut amid weak demand and slowing global growth.

Gold Rallies on Fed Easing Bets, Copper Hit by Tariff Fallout

Gold held steady near $3,360/oz after posting its strongest two-month rally this year, bolstered by haven demand following the poor U.S. jobs report and rising geopolitical risks. Silver, platinum, and palladium posted modest losses.

Copper markets remain volatile. A surprise U.S. exemption for raw copper forms caused a sharp selloff in U.S. futures, with traders now shifting supplies to LME warehouses. Prices could stay under pressure despite strong long-term fundamentals.