Markets Await US Jobs Report Tonight

• Risk sentiment firmed overnight as data signalled further softness in the US labour market. Attention now turns to tonight’s payrolls, expected to confirm the slowdown and reinforce prospects for a September Fed cut.
• ADP payrolls rose just 54,000 in August (vs 68,000 expected), while initial jobless claims increased by 8,000 to 237,000. Taken together, these indicators reinforce the picture of a cooling jobs market.
• Bond markets responded quickly, with US 10-year Treasury yields falling 5bp to 4.16% as the market solidified Fed rate cut expectations.
• Closer to home, household spending stayed resilient in July, with the ABS monthly spending indicator rising 0.5% m/m. Annual growth accelerated to 5.1%, the strongest pace since November 2023, pointing to underlying strength in consumer demand.