Volatile stock markets and surging gold prices following the release of US employment statistics

The financial markets experienced a significant shift in the afternoon of today, as the US dollar began to fall and Treasury yields dropped. Since 14:30, the US dollar index has decreased, while the gold price and the US100 CFD for US tech stocks have risen.

The weaker-than-expected US jobs data for August, which showed only 22,000 new jobs added, significantly lower than the expected 75,000, has increased the chances of multiple Fed rate cuts this year. There was also a downward revision of the previous two months' US jobs data by -21,000 jobs.

This disappointing jobs report has led to a rise in gold prices, as gold, with no yield, becomes more attractive relative to less rewarding bonds. The gold price has risen from $3,553 to $3,590 since 14:30. Some experts, such as those at Commerzbank, now see a chance of a 50 basis points rate cut by the Fed next week, instead of the expected 25 basis points. Commerzbank expects a large rate cut of 50 basis points, and they anticipate the Federal Reserve to lower the interest rate by 0.25 percentage points at the upcoming September 2025 meeting, marking the first cut since December 2024, following signs of economic slowdown and subdued inflation pressures in the US.

The falling US Treasury yields could be due to the weaker-than-expected US jobs data, as investors are anticipating cheaper borrowing costs for US companies and consumers. The two-year US Treasury yield has fallen from 3.57% to 3.48% since 14:30.

Meanwhile, the Nasdaq 100 is up +0.77% for US trading, and the S&P 500 is up +0.42% for US trading. Despite the weakening US job market, which is usually bad for stocks, investors are currently focusing on expected strong rate cuts to stimulate the economy.

However, the US100 CFD for US tech stocks is moving up, indicating that some sectors of the US economy may still be thriving amidst the economic uncertainty.

As the situation evolves, it will be interesting to see how the markets react to the anticipated Fed rate cuts and the impact they may have on the US economy.