jakiro
In early September 2025, US economic data once again attracted market attention.The U.S. labor market data showed signs of continued slowdown in the past week, with the non-farm employment report (NFP) becoming the focus.Although the S&P 500 hit a record high at one time, it then showed a significant pullback, reflecting investors’ concerns about the economic outlook.At the same time, gold prices continued to rise, breaking through the $3,600/ounce mark, while global long-term bond yields showed an upward trend, especially 30-year bonds.These two major themes—the weakness of the labor market and the selling of the bond market—intersect each other, highlighting the uncertainty of the macroeconomic.Based on the latest data, this paper objectively analyzes these phenomena and explores their potential impacts.The analysis mainly refers to sources such as the US Bureau of Labor Statistics (BLS), ADP reports, and global bond market trends.
U.S. labor market: slowdown trend intensifies
The U.S. labor market continued to show weak signals in August 2025, consistent with data trends over the past few months.According to the August non-farm employment report released by BLS, the number of new non-farm jobs in the United States was only 22,000, far lower than the market expectations of 75,000.This figure is not only lower than expected, but also reflects a continued slowdown in employment growth: July employment data was revised up to 106,000, but June revisions showed a 13,000 decline in real employment, the first negative growth since 2020.The unemployment rate rose slightly to 4.3%, the highest point in the past four years, with the number of unemployed people remaining at around 7.4 million.
From a broader perspective, JOLTS (Job Vacancies and Labor Movement Survey) data showed that job vacancies fell to 7.181 million in July, the lowest level since September 2024, lower than market expectations of 7.4 million.This level is close to the pre-pandemic average, but considering the U.S. population growth, this means that the current labor market is weaker than before the pandemic.The ADP private employment report also confirms this trend: 54,000 new jobs were created in the private sector in August, down from the expected 65,000, and a significant decline from 106,000 in July.In terms of wage growth, the annualized wage growth rate fell slightly to 3.8%, while the average weekly working hours were slightly shortened to 33.7 hours.
The industry distribution of employment growth further reveals structural problems.According to BLS data, employment has been concentrated in the health care and services sectors over the past few months, which have benefited from the demand for aging population.For example, new jobs in health care account for nearly 40% of the total, while job losses in manufacturing, retail and construction industries.The diffusion index shows that employment growth in most industries is negative, indicating that the weakness of the labor market is not limited to specific areas, but rather insufficient overall demand.The immigration factor may partly explain the increase in labor supply, but weak demand is more prominent.
These data are consistent with a longer-term trend: Since the beginning of 2024, the average monthly growth of non-farm employment has dropped from 200,000 to less than 100,000.The revision mechanism further amplifies uncertainty.BLS will release a benchmark revision based on the Quarterly Employment and Wage Survey (QCEW) on September 9, which is expected to show that employment data in the first half of 2025 was overestimated, with a potential downward revision of hundreds of thousands of jobs.This may reinforce market concerns about recession, similar to the nonlinear effects described by Sam’s rule (the unemployment rate rises by 0.5 percentage points to trigger the recession signal).
The potential impact of the slowdown in the labor market on the economy is significant.If employment continues to weaken, consumer spending may decrease, creating a vicious cycle.Currently, labor force participation has risen slightly to 62.7%, but is not enough to offset weak demand.Federal Reserve Chairman Powell previously stressed the strong labor market, but the latest data suggests that view is outdated.Instead, some Fed officials, such as Waller, have warned that the Fed’s actions are lagging, may need to cut more aggressively to support the economy.
Global bond market sell-off: Multi-factor drives rising long-term yields
In contrast to the weakness of the labor market, the global bond market sell-off, especially the rise in long-term bond yields.This is not an isolated phenomenon, but a combined result of technical, fiscal and inflation factors.In early September 2025, the yield on the 30-year U.S. Treasury bonds was once close to 5%, and finally fell back to 4.86%.30-year bond yields in Europe and Japan also rose simultaneously, reflecting global pressure.
First of all, technical factors are particularly prominent in Europe.Dutch pension reform is the key driver: The Netherlands has the largest pension system in the euro zone, with an asset size of about 2 trillion euros.Starting from 2025, the country will shift from fixed income pensions to fixed contribution models, and pension funds no longer need to purchase large quantities of long-term bonds to hedge their liabilities.This has led to a decrease in demand for long-term bonds, driving yields to rise.In the first quarter, the Dutch pension fund has lost 54 billion euros of investment value.This reform may affect the entire euro zone bond market, with Germany’s 30-year bond yield rising to its highest since 2011.
Secondly, the fiscal deficit issue has exacerbated the pressure on the bond market.The UK fiscal deficit exceeded 5% GDP, with the 30-year gilt yield rising to its highest since 1998 5.6%.The UK Debt Management Office recently sold £14 billion 10-year gilt at a yield of 4.8786%, with a premium of 8.25 basis points.The situation in France is similar, with a deficit expected to reach 5.6%-5.8% GDP in 2025, exceeding the official target.Political uncertainty amplifies risks: France’s 30-year bond yield rose to 4.5%, the highest since the eurozone debt crisis in 2011.Although the U.S. fiscal deficit is not as serious as Europe, policy uncertainty (such as potential tariffs) has also pushed up the risk premium.The proportion of U.S. debt to GDP has reached 100%, and interest expenditure on potential debt has increased by $22 billion.
Third, inflation expectations are another core driver.Inflation in the United States is stable at around 3%: the core PCE inflation rate rose to 2.9% in July, the highest since February; the annualized CPI rate is expected to be 2.9%.This makes the 2% target far away, with investors worried that long-term inflation will erode bond value.Japan’s inflation is more prominent: CPI fell to 3.1% in July, but it is still above the Bank of Japan’s (BOJ) 2% target.Population aging has exacerbated inflationary pressure: the working-age population peak has passed, and the labor force participation rate over 65 years old has risen to a high level, but the participation rate of women has been saturated, resulting in a rising wage.BOJ President Kazuo Ueda confirmed at the 2025 Jackson Hall Conference that aging is an inflation factor.BOJ expects the core CPI to be 2.4% in fiscal 2025 and the policy interest rate remains at 0.5%.
These factors have led to a general increase in global 30-year bond yields: 4.86% in the United States, 5.52% in the United Kingdom, 4.5% in France, and Japan also continue to rise.Although short-term yields have fallen due to expectations of rate cuts, the curve has steepened, showing investors’ concerns about long-term risks.
Market response and policy prospects
Weak employment data triggers asset price fluctuations.Gold prices soared to nearly $3,600 per ounce, up 1.4%, benefiting from safe-haven demand and interest rate cut expectations.The dollar index fell to a 16-month low, reflecting the prospects for the Fed’s easing.The S&P 500 initially rose, but then pulled back and closed around 6460 points.The market interprets it as “bad news is good news”, but judges should be cautious: weak data may indicate recession, rather than simply benefiting the stock market.
The Fed’s expectation of a rate cut strengthens: the probability of a rate cut in September is 100%, which may be 50 basis points, rather than 25.A 25 basis point rate cut is expected for three to four times throughout the year.Next week’s CPI data will be key: if it is lower than expected, it may drive a larger rate cut.Central banks around the world such as ECB and BOJ will also adjust their policies to cope with fiscal and inflationary pressures.
in conclusion
The slowdown in the U.S. labor market and rising global bond yields reflect cyclical challenges and technical adjustments.Data show that underdemand demand and structural problems are dominating the labor market, and bond sell-offs are due to multiple pressures.If inflation remains at 3%, the fiscal deficit is not controlled and the yield may continue to rise.Investors should focus on benchmark revisions and CPI data to assess recession risks.Overall, although these trends increase uncertainty, they also provide room for policy interventions and potentially support the prospect of soft landing.
