President Trump Rescues Treasuries After Blockbuster Payrolls Sent Yields Soaring: Sept. 4, 2026

President Trump rescued Treasuries this morning after a blockbuster nonfarm payrolls report sent yields soaring. The strongest level of hiring in five months strengthened the probability of a rate hike in just 12 days, as the monetary policy sensitive 2-year maturity jumped to a 19-month high, but the commander in chief’s comments a few hours following the release of the labor print pared losses in the government debt complex, thereby bringing tenors across the curve close to their flatlines. The POTUS, in a Truth Social posting, demanded that the Federal Reserve cut borrowing costs and threatened to stop trading with countries that maintain a surplus with the US if the central bank doesn’t follow with his order. Despite the message threatening the institution’s independence and presumably being bearish for the dollar, improving economic growth prospects are countering that adverse effect on the currency, and the greenback is still appreciating on the session, although it’s well off its highs. The head of state additionally took a victory lap, effectively giving himself and his administration credit for the terrific employment data; he even mentioned that the headline number broke all estimates except for his own. Turning back to action on Wall Street, stocks are mostly down, however, as 9 of the 11 principal sectors fall amidst the 4 major domestic benchmarks slipping into the red. Cryptocurrencies and precious metals are also sinking on weakening speculative enthusiasm. Elsewhere, cyclical commodities and volatility protection instruments are relatively unchanged while prediction markets catch bids.

Hiring Jumps To Five-Month High

The US labor market improved significantly last month as employers in most industries raised headcounts. Indeed, the 162k jobs added beat every official forecast submitted by economists, arriving ahead of the median estimate of 45k and July’s upwardly revised 71k. Of the 14 major sectors, 12 posted gains, with leadership coming from the following categories with the number of additions as stated:

• Leisure/hospitality, 62k
• Government, 35k
• Private education/health services, 29k
• Construction, 22k
• Manufacturing, 16k

The other segments that expanded their payrolls saw more modest expansions of 10k or fewer, while information and financial activities, the two areas that have been the most affected by artificial intelligence displacing employees, experienced declines of 23k and 11k.

Other Indicators Point to Labor Market Strength

The unemployment rate remained steady at 4.1%, in-line with projections, while average hourly earnings climbed 0.3% month over month (m/m) and 3.1% year over year (y/y), near expectations of 0.3% and 3% and the prior period’s 0.2% and 3.2%. Additionally, the workforce grew by 683k people, which drove the first increase in participation since September 2025; it rose from 61.4% to 61.6%. In another positive development, the average hourly workweek rose to 34.3, marking another desirable development, jumping to its loftiest level going back to March 2024, while signaling that businesses are demanding laborers.

Trump, Treasury, Fed Puts, All In One Week

This week’s communications from governmental and central banking officials seemed to quell the angst stemming from Chair Kevin Warsh’s hawkish Jackson Hole, Wyoming, speech. Economists and analysts alike are now confused as to whether a hike will occur in 12 days, as easing core inflation signals that the only reason price pressures are above target is the Middle East turmoil. Secretary Scott Bessent declared that yields are geared to plunge when that grapple is reconciled, while NY Fed leader John Williams and the POTUS pointed to an incredibly strong economy, and that quelled market volatility as investors were reminded that they are enjoying the benefits of robust activity via buoyant corporate earnings. Governor Christopher Waller additionally opined about tempered cost forces and leaned into a pause at the upcoming verdict, while encouraging fixed-income watchers and equity traders to ignore fundamentals in the present, which are substantiating tighter financial conditions rather than a looser backdrop, and support current valuations across asset classes. It’s precisely the Trump, Fed and Treasury puts occurring in relative unison that have helped Wall Street overcome the early September struggle, and the potential for softening inflation data in a few sessions followed by a hold at the rate decision on the 16th could result in markets conquering seasonal headwinds and posting a gain this month.

International Roundup

Canada’s Labor Market Sheds Workers

Canada’s ranks of the employed shrank by 41.7k in August, but the unemployment rate, at 6.4%, was unchanged, according to Statistics Canada. Economists expected a 15.1k gain following the 75.1k additions in July. Despite the recent decline in payrolls, the country still has 217k more individuals punching time clocks than in the year-ago period. Among the August losses, 35.9k were full-time workers and 5.8k were part-timers.

The following categories and the extent of their changes experienced the largest numbers of losses:

• Business, building and other support services, 20k
• Wholesale and retail trade, 10.5k
• Finance, insurance, real estate, rental and leasing, 9.6k
• Public administration, 8.8k
• Educational services, 8.7k
• Natural resources, 7.7k
• Utilities, 5.6k

Conversely, manufacturing added 22k workers and the category of information, culture and recreation increased payrolls by 12k. The health care and social assistance classification and construction, furthermore, expanded their number of workers by 6k and 1.5k, respectively.

Employers Appear to Brace for Tariffs

The country’s layoff rate, which is the proportion of individuals who have become unemployed due to job losses, averaged 0.7% in the 12 months to August, according to Statistics Canada. For industries that are considered dependent on US exports, the rate was 0.9%, pointing to businesses potentially preparing for a decline in demand due to the long simmering US-Canada trade war. More recently, the US slapped a 50% tariff on roughly $20 billion worth of imports from its northern neighbor. Canada has responded with similar retaliatory actions.

Unemployment Rate Is Stable, Participation Falls

After three months of declines, the unemployment rate remained unchanged at 6.4% while the participation rate, which measures the portion of the working age population that is either employed or seeking work, fell marginally from 65.1% to 65%.

And Wage Gains in Canada Decelerate

After being 3% higher y/y in July, wages were up only 2% y/y last month.

Europe Posts Mixed Retail Sales Results

The volume of retail trade in the euro area sank 0.6% m/m in July but was still 0.6% higher than in the year-ago period, according to Eurostat. The results were considerably weaker than the economist consensus estimates for m/m and y/y growth of 0.3% and 1.1% and June’s 0.2% and 1.4% m/m and y/y expansions. When compared to June of this year, consumers dished out 0.4% more for food, drinks and tobacco, but they cut spending on non-food products (except auto fuel) and automobile fuel at specialized stores by 1.4% and 0.8%, respectively. 

Japan Household Expenditure and Wages Fall

The average expenditure for households of two or more individuals in Japan sank 3.6% y/y in real terms during July but ascended 0.5% relative to the preceding month. The y/y decline was more abrupt than 3.3% dip in June and the economist consensus estimate for a 1.6% descent. On a more positive note, the m/m metric was a reversal from June’s 6.4% collapse, but it was still considerably below the economist consensus estimate of 2.6%.