BlockBeats report: On September 7, U.S. non-farm payrolls added 162,000 jobs in August, significantly exceeding the market’s previous expectation of around 56,000. Additionally, employment data for June and July were collectively revised upward by 55,000, indicating that the U.S. labor market is more resilient than previously reported. The unemployment rate remained at 4.1%, while average hourly earnings rose 0.3% month-over-month and 3.1% year-over-year, suggesting that although hiring remains subdued, there are no signs of a sharp slowdown sufficient to compel the Federal Reserve to rapidly ease policy. This has shifted the September policy discussion back toward the combination of “inflation remains high, employment remains stable,” thereby reinforcing expectations of rate hikes.
However, this non-farm payroll report is not without structural concerns. Job growth was primarily driven by the food service and local government education sectors, while the information industry saw a decline of 23,000 jobs, and healthcare hiring grew more slowly than the average over the past year. Meanwhile, although the labor force participation rate rose slightly to 61.6%, it remains 0.5 percentage points lower than at the start of the year. In other words, while the overall non-farm payroll figure is strong, it does not necessarily indicate a broad-based recovery in business hiring demand; rather, it may reflect a combination of sector-specific recovery and a contraction in labor supply. Therefore, the upcoming CPI data will still determine whether the Fed can legitimately use the strong employment figures as justification for rate hikes—rather than allowing a single non-farm report to define the entire policy direction.
Another variable facing the market comes from Japan. Japan’s overseas securities holdings decreased by $87.8 billion in August, closely approaching the $98.6 billion scale of yen intervention during the same period, prompting market participants to focus on whether Japan is funding its intervention by selling overseas assets, including U.S. Treasuries. If this speculation holds true, it could create a notable capital chain: Japan’s sale of dollar-denominated assets to support the yen may increase supply pressure on U.S. Treasuries; meanwhile, rising expectations of Bank of Japan rate hikes are prompting investors to reduce yen carry trades. The simultaneous occurrence of these two factors could amplify volatility across the dollar, yen, and global bond markets.
More notably, the Federal Reserve itself faces additional institutional pressure. The schedules of Bowman and Wash meeting with banking industry representatives around the FOMC’s silent period have been revealed; while there is currently no evidence of rule violations, the Fed’s independence and policy credibility have once again come under market scrutiny against the backdrop of Trump’s persistent calls for lower rates and the U.S. national debt reaching $40 trillion. This means the true core issue in September is no longer simply “whether to raise rates,” but whether strong employment, persistent inflation, increased U.S. debt supply, and capital inflows from Japan are collectively keeping global funding costs elevated. If CPI remains resilient, rising rate expectations could further strengthen the dollar and push up U.S. Treasury yields, squeezing liquidity for overvalued assets and cryptocurrencies; conversely, if inflation cools in the coming data, markets may have an opportunity to reassess and reduce their pricing of prolonged high rates.