Taiwan Index Futures Night Session Surges Over 700 Points, Breaching 45,000! US July Nonfarm Payrolls Plunge, Market Cuts Fed Rate Hike Bets

The U.S. Bureau of Labor Statistics released data late on the evening of August 7 (Taiwan time) showing that nonfarm payroll employment unexpectedly decreased by 23,000 in July—far below the market expectation of an 80,000 increase and marking the first negative growth since February. Additionally, May and June’s job gains were revised downward by a combined 103,000, indicating that labor market momentum has weakened more than previously thought.

Notably, despite the disappointing job growth, the July unemployment rate declined from 4.2% to 4.1%, slightly below the expected 4.2%. This seemingly contradictory figure reflects a simultaneous contraction in labor supply rather than a clear improvement in employment demand.

According to updated figures, May’s nonfarm payroll gain was revised down from 129,000 to 63,000; June’s was adjusted from 57,000 to 20,000. Combined with July’s negative reading, these revisions underscore the ongoing weakness in the U.S. labor market.

Nick Timiraos, a journalist at The Wall Street Journal often referred to as the "Fed whisperer," noted that the drop in unemployment was not due to a stronger job market but rather because both the number of job seekers and those officially counted as unemployed declined, pushing the rate to its lowest level in nearly two years.

This significantly weaker-than-expected jobs report heightened concerns about the U.S. economy and placed the Federal Reserve in a more difficult policy position: balancing cooling labor conditions against persistent inflationary pressures. Policymakers must still navigate between price stability and employment support.

Financial markets reacted sharply: U.S. stock futures, Treasury prices, and gold all rose, while non-U.S. currencies gained broadly. Taiwan index futures extended their rally, surging over 700 points and briefly breaching the psychological 45,000 level by the time of reporting.

Market pricing in interest rate futures now suggests only 28 basis points of cumulative rate hikes by the Fed by year-end, down from 32 basis points before the jobs data release—indicating declining investor bets on further monetary tightening.

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