Financial markets have rapidly repriced expectations for US monetary policy following the release of disappointing July employment data.
Traders have sharply reduced the probability of a Federal Reserve interest rate hike at the upcoming September meeting, effectively removing the scenario from current pricing models.
The shift in rate futures comes after the Labor Department reported that the US economy added only 57,000 nonfarm payrolls in July, a figure that fell well short of consensus estimates.
The softness in the labor market has significantly tempered fears of an immediate tightening move by the central bank, prompting a broad reassessment of the policy path for the remainder of the year.
Global equity markets responded positively to the data, posting broad gains as investors digested the implications for growth and policy.
The weaker jobs report suggests that the US economy is cooling, reducing the urgency for the Federal Reserve to raise rates to combat inflation.