Markets Eye Fed Easing as Jobs and Manufacturing Data Signal Slowdown

GLOBAL MOOD: Risk-on
Drivers: Fed rate cuts hopes, Trade uncertainty, 

Markets leaned risk-on as cooling US job openings and weak factory orders bolstered expectations of imminent Fed rate cuts, though trade tensions from Trump’s tariff warnings and lingering growth concerns kept investor sentiment somewhat cautious.

TODAY’S WATCHLIST

• US Jobless Claims
• US Composite and Services PMI
• Fed Williams Speech 

THE BIG STORY
Several Federal Reserve officials signaled that rate cuts are likely in the near term, citing concerns about a slowing labor market. Fed Governor Christopher Waller reiterated his call for a cut at the September 16–17 meeting, noting that labor market downturns tend to happen quickly, and suggested multiple cuts could follow over the next three to six months. Atlanta Fed President Raphael Bostic described policy as “marginally restrictive” and indicated a 25-basis-point easing could be appropriate later this year. Minneapolis Fed leader Neel Kashkari also highlighted room for gradual rate reductions given the neutral fed funds rate around 3%. Investors now largely expect a quarter-point cut in the federal funds rate later this month, currently at 4.25%–4.5%.

Meanwhile, President Donald Trump warned that the US might have to “unwind” trade deals with the European Union, Japan, South Korea, and other partners if the Supreme Court upholds a recent ruling that found many of his tariffs illegal. Speaking at the White House, Trump said a loss would cause the US “to suffer so greatly,” but expressed confidence that his administration would prevail. He noted that existing deals with the EU are “done” and could be at risk if the court’s decision stands, marking the first time he specifically suggested major trade agreements could be invalidated over the tariff ruling. 

Data Spotlight 
US job openings fell to a 10-month low in July, dropping below the number of unemployed for the first time since the COVID-19 pandemic, signalling easing labour market conditions and supporting expectations of a Federal Reserve rate cut. Openings declined to 7.18 million from 7.36 million in June, led by health care, arts, entertainment, and mining sectors, while the West saw an increase of 113,000 positions.

Meanwhile, new orders for US manufactured goods fell 1.3% in July to $603.6 billion, extending last month’s steep 4.8% drop. Transportation equipment orders slumped sharply, particularly for nondefense aircraft and parts, while machinery, primary metals, and computer and electronic products saw gains.

Takeaway: US labour demand is cooling, with job openings falling below the number of unemployed for the first time since the pandemic, while manufacturing orders are contracting, particularly in transportation equipment. These trends suggest that the economy is slowing, reinforcing expectations that the Federal Reserve will cut interest rates soon to support growth. 
 

WHAT HAPPENED OVERNIGHT

• US Stocks rose on Wednesday, Nasdaq gained 1.03% and S&P 500 by 0.51%.
  
  • Alphabet +9.1% after court ruling in antitrust case avoided worst-case breakup.
  • Tech led gains; banks and energy lagged.

• US Treasury Yields move lower after weak labour data boosted Fed cut bets.
  
  • Market pricing around 95% chance of 25 bps cut in September.
  • Traders now see at least two cuts by year-end.
  • Fed signals: Musalem, Bostic, and Waller gave differing views, but overall bias shifted dovish.
  • Beige Book showed “little or no change” in activity; tariff-related price rises noted.

• US Dollar weakened as weak jobs data fueled dovish Fed bets.
  
  • Dollar Index fell 0.36% to 98.047.
  • Traders positioning cautiously ahead of Friday’s jobs report.
  • Sterling gained after gilt yields hit highest since 1998.

• Crude Oil prices fell over 2% ahead of Sunday’s OPEC+ meeting.
  
  • OPEC+ considering early unwinding of cuts (1.65m bpd).
  • Already pledged to boost output by 2.2m bpd Apr–Sep.
  • Risk of surplus from late 2025 if cuts rolled back.
  • Saudi & Iraq supply to India impacted by EU sanctions

Day’s Ledger

Economic Data

• US Jul Balance of Trade
• US Jobless Claims
• US Composite and Services PMI

CORPORATE ACTIONS

• Harish Textile to consider fund raising
• Laxmi Goldorna to consider fund raising
• Onesource Industries warrant issue
• SAL Steel to consider fund raising
• Zota Health to consider fund raising

POLICY EVENTS

• ECB Cipollone Speech 
• Fed Williams Speech 

Tickers to Watch

• BHEL to supply power equipment to MB Power in Madhya Pradesh
• MUTHOOT FINANCE board clears allotment of senior secured loans due 2030
• POLY MEDICURE acquires Netherlands-based PendraCare Group via subsidiary
• RAILTEL wins order from Home Affairs Ministry for network services

MUST READ:

• State Bond Glut is Breaking Monetary Transmission
  
• Regulation, Not Prohibition, the Safer Bet for Online Gaming
  
• Germany Wants EU-India Trade Deal Concluded by Fall This Year
  
• Indian Firms Target Small-Town Growth That’s Insulated from US Tariffs
  
• Indian Shadow Banks’ IPO Boom Falters on Mounting Credit Stress
  
• From Tokyo to London, bond investor fears over fiscal discipline leave markets on edge
  
• India’s TRP ratings giant’s monopoly may end amid OTT and connected screen shift
  
• Fresh registrations of companies surge despite tariff shock

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See you tomorrow with another edition of The Morning Edge.

Have a great trading day.

Compliance is no longer back-office paperwork. It’s the circulatory system of modern banking.

Anupam Sonal writes, from AI ethics to fintech risks, banks must embed compliance as strategy, not ritual. Done right, it’s the trust-battery that powers performance and resilience.