U.S. jobs report in August reveals damage the Fed should mend

At this moment in the U.S. economy — when interest rates are higher than usual and inflation still above the Federal Reserve’s 2% target — the jobs report is rather like an injury. You want it bad enough, like a gash, to elicit sympathy from others, but not so serious that it rends flesh and exposes bone.

The August jobs report was more like the latter. New payrolls came in more than one-third below expectations. On the bright side, even though the unemployment rate rose to 4.3% from 4.2% the month prior, it was largely because of a 436,000 increase in the size of the labor force — meaning it’s not so much layoffs but more job seekers that caused the increase in unemployment.

That said, the wound to the U.S. economy was severe enough that traders expect the Federal Reserve to administer some tender loving care soon. According to the CME FedWatch tool, the futures market, as of Monday 1:30 p.m. SGT (1:30 a.m. ET), has priced in an 10% chance of a supersized 50 basis points rate cut at the Federal Reserve’s September meeting. The probability was 0% a month ago. And a reduction of at least  25 basis points is all but certain.

The prospect of such soothing by the central bank helped investors bear the pain of the jobs report stoically. Major U.S. indexes fell Friday, but only moderately. The Nasdaq Composite closed around the flatline, supported by strong bones in the tech sector.

If the Fed cuts rates later this month — a move it’ll almost certainly make — it’ll be a stitch, just in time, to save investors more than a dime.

Dismal U.S. jobs report for August. Nonfarm payrolls in the U.S. rose by 22,000 for the month, below the 75,000 expected by a Dow Jones survey. While job numbers for July were revised up, June’s figures were revised down to result in a net loss of 13,000 jobs.

Massive refunds if tariffs ruled illegal, Bessent warns. In a Sunday interview, U.S. Treasury Secretary Scott Bessent said if the Supreme Court strikes tariffs down, “we would have to give a refund on about half the tariffs, which would be terrible for the Treasury.” 

Alibaba invests $100 million in Chinese humanoid startup. Other investors of X Square Robot include HongShan, formerly Sequoia Capital China, Meituan, Legend Star and INCE Capital. The startup said it plans to launch an initial public offering next year.

U.S. markets ended the week higher. However, all three major indexes fell Friday. On Monday, Japanese stocks jumped on Prime Minister Shigeru Ishiba’s resignation announcement over the weekend. The CSI 300 climbed even as Beijing’s exports growth in August missed expectations.

[PRO] Inflation data on the radar this week. After August’s jobs report, the U.S. producer and consumer price indexes are in focus. They will give an indication on how the Fed can balance its twin mandates of maximum employment and stable inflation.

Why Italy is bucking the super-rich clampdown

Italy — a perennial favorite of the rich and famous — is attracting a new wave of ultra-wealthy arrivals looking to take advantage of its investor friendly environment, thriving real estate market and low tax regime.

As many other countries clamp down on the super-rich, Italy has been bucking the trend; its accommodative flat-tax regime has enticed hordes of big spenders drawn to luxury living and Milan’s increasingly bustling business scene.

— Karen Gilchrist