The US economy added fewer jobs than forecast in June, with prior months' data also revised lower, triggering a significant repricing of Federal Reserve policy expectations.
The disappointing employment report has cooled the market's appetite for further tightening, as traders reassess the likelihood of an interest rate hike at the central bank's upcoming meeting.
Following the release, traders sharply reduced bets on a July rate increase.
This marks a notable shift from earlier positioning, where a resilient labor market was seen as providing ammunition for Federal Reserve Chairman Kevin Warsh’s commitment to price stability.
The previous consensus had intensified expectations for a hike, but the softer-than-expected labor data has introduced fresh uncertainty into the policy calculus.
Economists remain divided on the trajectory of monetary policy over the next six months.