The US macro tape ran the first data week post-FOMC blackout from Monday August 3 through Friday August 7, closing on the BLS Employment Situation release at 8:30 ET Friday. July ISM manufacturing printed at 55.6 on Monday, up 2.3 points on the month and the highest reading since May 2022, with the employment sub-index at 52.8 crossing above 50 for the first time in 33 months. July ISM services printed at 54.1 on Wednesday, up 0.1 point on the month, with the business activity sub-index at 59.1 and the employment sub-index at 47.4 back in contraction. July nonfarm payrolls landed at minus 23 thousand headline on Friday, the first negative cycle print, with private payrolls at plus 30 thousand and government payrolls at minus 53 thousand led by local education. The May two-month back-revision walked May from 129 thousand to 63 thousand and the June one-month back-revision walked June from 57 thousand to 20 thousand, a combined downward revision of 103 thousand across the two prior prints. Average hourly earnings printed at plus 0.05 percent month over month, rounding to flat, and plus 3.15 percent year over year, the softest year-over-year AHE read since 2021. Temporary layoffs jumped 153 thousand on the month to 921 thousand. Fed-funds futures closed the week with the September 17 cut probability sealed at 99 percent and the December 10 second cut probability walked back above the 72 percent line on the Friday print.

The Monday ISM manufacturing surprise

Monday August 3 opened the post-blackout data window with a week-ahead framing published pre-market, then ran the July ISM manufacturing release at 10:00 ET. The headline PMI at 55.6 printed 2.3 points above the June final of 53.3 and the highest reading since May 2022, when the index printed 55.9. The production sub-index at 58.5 jumped 6.3 points on the month, the highest print since November 2021. The new orders sub-index at 56.7 ticked up 0.7 point on the month and marked the seventh consecutive expansion print. The employment sub-index at 52.8 crossed above 50 for the first time in 33 months, walking off the 49.7 June read. The backlog of orders sub-index at 55.0 printed 4.5 points above June. Fifteen of the 16 manufacturing industries the ISM tracks reported expansion, with only Chemical Products reporting contraction on the month.

The Monday print carried an immediate reprice against the two-cut year the July 30 statement had priced. Fed-funds futures walked the December 10 second cut probability from 70 percent at the prior Friday close to 60 percent by Monday’s cash close. The December 2026 SR3 contract implied year-end fed-funds rate walked up 12 basis points on the session. The tape read the manufacturing employment sub-index crossing above 50 as a direct challenge to the labor-side softening trajectory the June NFP at plus 139 thousand had carried into the statement.

The Tuesday and Wednesday services tape

Tuesday August 4 ran June JOLTS at 10:00 ET and June factory orders at 10:00 ET on the same wire. The June JOLTS quit rate held at 2.0 percent and confirmed the labor-side softening the June NFP print carried, offsetting the Monday manufacturing employment read on the composite labor-side signal.

Wednesday August 5 ran the July ADP employment report at 8:15 ET and the July ISM services PMI at 10:00 ET. The ISM services headline at 54.1 printed one tick above the June final of 54.0 and marked the 25th consecutive month in expansion. The business activity sub-index at 59.1 jumped 3.7 points on the month off the June reading of 55.4. The new orders sub-index at 57.2 ticked up 2.1 points. But the employment sub-index at 47.4 collapsed 3.8 points on the month and returned to contraction territory, the first sub-50 services employment print since March. The services input prices sub-index held in the low 60s and kept the tariff pass-through channel the goods CPI has been watching alive.

The Wednesday split was the week’s structural tension. The business activity and new orders lines in services confirmed the demand-side firmness the Monday ISM manufacturing print flagged. The employment sub-index collapse in services confirmed the labor-side softening the June JOLTS quits print carried. The composite read left the strip inside a corridor where a firm July NFP would validate the single-cut year and a soft July NFP would validate the two-cut year, with the December second cut probability sitting at 63 percent at Wednesday’s cash close, up three points off Monday’s low.

The Thursday productivity and claims setup

Thursday August 6 ran weekly initial jobless claims at 8:30 ET and Q2 preliminary nonfarm business productivity at 8:30 ET on the same wire. Initial claims for the week ending August 1 printed at 224 thousand, three thousand above the prior week print of 221 thousand and inside the 215 to 235 thousand channel that has held since May. The four-week moving average at 223 thousand printed one thousand higher on the week and inside the twelve-month range midpoint. Continuing claims for the week ending July 25 printed at 1.95 million, near the floor of the 1.94 to 1.97 million band the release has held for nine weeks.

Q2 preliminary nonfarm business productivity printed at plus 1.9 percent annualized, one tick above the consensus band the week-ahead flagged and the fourth consecutive quarter above 1.5 percent. Unit labor costs printed at plus 1.6 percent annualized on the same release, the softest quarterly print in six quarters. The productivity read carried directly into the wage-side conversation the Friday NFP AHE line was staged against: sustained above-trend productivity with softening unit labor costs pulls the wage-side inflation pressure the July 30 Waller and Bostic dissents flagged inside a narrower band. Fed-funds futures closed Thursday with the December second cut probability at 65 percent, up two points on the day.

The Friday July NFP print

Friday August 7 ran the BLS Employment Situation release at 8:30 ET. The three prints under the same timestamp landed at:

  • July headline nonfarm payrolls: minus 23 thousand, the first negative headline print of the cycle, roughly 105 to 118 thousand below the consensus band of plus 83 to plus 95 thousand.
  • May two-month back-revision: walked from the initial plus 154 thousand to a revised plus 63 thousand, a downward revision of 66 thousand on the second look.
  • June one-month back-revision: walked from the initial plus 139 thousand to a revised plus 20 thousand, a downward revision of 37 thousand on the first look. The June-plus-May combined revision removed 103 thousand payrolls from the initial prints.

The private payroll line at plus 30 thousand carried the private-side softening the June JOLTS quit rate and the July ISM services employment sub-index had flagged. The government payroll line at minus 53 thousand carried the local education line as the primary contributor, an unusual July print magnitude tied to the summer calendar interaction with the household-based seasonal adjustment. The temporary layoff line at 921 thousand, up 153 thousand on the month, printed the highest monthly step in the temp-layoff series since 2020 outside the pandemic window. Temp-layoff step-changes of this magnitude have historically preceded a sustained rise in the headline unemployment rate inside a two-to-four-month window.

The household survey unemployment rate at 4.1 percent printed one tick below the June read of 4.2 percent despite the negative payroll headline, driven by a labor force participation rate at 61.4 percent, down two ticks on the month. The compositional read: the unemployment rate did not lift alongside the payroll softening because the labor force contracted alongside the payroll base. The Sahm rule carries a three-month moving average through July at 4.13 percent against a trailing twelve-month low of 3.80 percent, landing the Sahm gap at 0.33, inside the 0.50 trigger band.

The average hourly earnings line at plus 0.05 percent month over month rounded to flat and printed the softest monthly AHE read since March 2021. The year-over-year AHE line at plus 3.15 percent sat 55 basis points below the June print of plus 3.7 percent and dropped through the two-percent PCE target plus 1.5 percent productivity-consistent real-wage growth threshold the July productivity print set. The wage-side inflation pressure the July 30 dissents flagged fully unwound on the July print.

The tape reaction ran in four steps. First: the ten-year yield broke through the 4.00 percent floor the Friday preview had flagged as the soft-print level in the opening thirty minutes, and closed the session 9 basis points lower on the day. Second: the two-year yield closed 13 basis points lower, walking the front end faster than the belly. Third: fed-funds futures walked the December 10 second cut probability from 65 percent to 76 percent on the print, above the 72 percent threshold the Friday preview had flagged as validating the two-cut year. Fourth: the March 2027 third cut probability walked from 52 percent to 63 percent, pulling the terminal-rate anchor conversation directly into the September 17 SEP dot-plot cycle.

What the week closed at

  • September 17 cut probability: 99 percent (unchanged on the week).
  • December 10 second cut probability: 76 percent (up 6 points on the week).
  • March 2027 third cut probability: 63 percent (up 11 points on the week).
  • Terminal rate read off December 2027 SR3 contract: 3.02 percent (down 10 basis points on the week).
  • Two-year Treasury yield: 3.28 percent (down 12 basis points on the week).
  • Ten-year Treasury yield: 3.94 percent (down 9 basis points on the week).
  • Thirty-year Treasury yield: 4.52 percent (down 9 basis points on the week).
  • 2s10s slope: 66 basis points (three basis points steeper on the week).
  • 5s30s slope: 35 basis points (three basis points steeper on the week).

The August 10 to 14 setup

The Monday August 10 tape opens quiet with no top-tier data on the calendar. Tuesday August 11 runs the NFIB small business optimism index for July at 6:00 ET and no Fed speakers on the calendar. Wednesday August 12 carries the single-print event the week stages against: the July CPI release at 8:30 ET. The consensus band the desk carries into the print sits at plus 0.15 to plus 0.25 percent headline month over month with core at plus 0.20 to plus 0.28 percent month over month, mapped off the July ISM services input prices at low 60s (holding the tariff pass-through channel warm) and the July ISM manufacturing input prices at elevated levels (goods-side pressure still live).

The year-over-year CPI headline would print in a plus 2.6 to plus 2.8 percent band under the consensus, and the year-over-year core would print in a plus 2.8 to plus 3.0 percent band. A July core CPI print above plus 0.28 percent would walk the December second cut probability back through the 65 percent line and would pull the single-cut year hedge back to the front of the desk conversation, running against the labor-side softening the Friday NFP confirmed. A July core CPI print below plus 0.15 percent would confirm the two-cut year the Friday NFP validated and would walk the March 2027 third cut probability through the 70 percent line, pulling a cadence conversation into the September 17 dot-plot cycle.

Thursday August 13 runs the July PPI release at 8:30 ET and weekly initial jobless claims at 8:30 ET on the same wire. The PPI headline consensus sits at plus 0.2 percent month over month with core PPI at plus 0.2 percent, mapped off the July NFP flat-AHE read. Friday August 14 runs July retail sales at 8:30 ET, July industrial production at 9:15 ET, and August University of Michigan preliminary consumer sentiment and inflation expectations at 10:00 ET. The UMich one-year-ahead inflation expectations at July final printed plus 3.1 percent, and the August preliminary carries a direct read into the FOMC reaction function through the September 17 statement.

The strip carries the two-cut year re-validated through the Friday NFP print and hands the tape to the August 12 July CPI release as the next single-print event the September dot-plot cycle stages against. The desk carries the December second cut probability at 76 percent and the March 2027 third cut probability at 63 percent into the Monday open. The tension the week set up: whether the July CPI print carries the wage-side inflation moderation the Friday flat-AHE line signaled through the goods and services CPI channels, or whether the ISM services input prices and the ISM manufacturing input prices hold the tariff pass-through pressure alive against the labor-side softening trajectory.

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