162,000 Jobs In August Put A Rate Hike Back On The Table

American employers added 162,000 jobs in August, roughly three times what forecasters expected, and the bond market read it as a reason the Federal Reserve might raise rates this month rather than cut them. Treasury yields climbed Friday, share prices and bond prices fell together, and the two-year yield touched its highest level since January 2025. Away from the data, Lululemon cut its full-year forecast and its shares dropped, while Volkswagen approved a plan built around 50,000 fewer jobs and watched its stock rise.

Fast Facts

• Diesel hit a record national average of $5.85 a gallon Friday, passing the June 2022 high, as the Iran war disrupts fuel supplies (Read More)
• Adobe named company veteran Anil Chakravarthy its next chief executive, replacing Shantanu Narayen, and the stock fell (Read More)
• $99 billion is the value of the stakes Nvidia now discloses in other companies, making it one of the biggest backers of the AI firms buying its chips (Read More)
• President Trump said he would cut off trade with countries running surpluses with the U.S. unless the Federal Reserve slashes rates (Read More)
• A record 47% of Americans told Gallup they want labor unions to have more influence, a group that now includes 52% of Republicans (Read More)
• The Treasury Department proposed rules stripping thousands of private schools of tax-exempt status and narrowing the break for donating to them (Read More)

Global News

• Norway's $2.3 trillion sovereign wealth fund, the world's largest, said it plans to trim its U.S. Treasury holdings and move into higher-risk assets (Read More)
• Bank of England chief economist Huw Pill said raising interest rates early could keep temporary price pressures from turning into lasting ones (Read More)
• World food prices rose in August as bad weather and supply disruptions across the Middle East and Black Sea regions raised supply concerns, the UN's Food and Agriculture Organization said (Read More)
• India's forecast-beating June-quarter growth figure is under scrutiny after a former government official said the number is overstated (Read More)

August Hiring Ran Five Times Its Recent Pace, And Bond Yields Climbed

The Bureau of Labor Statistics put August hiring at 162,000 in its 8:30 a.m. Eastern release Friday, against the 53,000 economists surveyed by Dow Jones had expected, according to CNBC. Hiring had averaged 31,000 a month over the prior year, so August ran more than five times that pace. The unemployment rate held at 4.1%. Revisions mattered as much as the headline: July flipped from a reported loss of 23,000 to a gain of 21,000, and June and July together came in 55,000 higher than first reported. Restaurants and bars supplied 59,000 of the August gain, and local school districts added 42,000.

Bond prices fell as soon as the number landed. The two-year Treasury yield, which tracks where investors think the Fed will set short-term rates over the next couple of years, rose about eight basis points, or eight hundredths of a percentage point, to roughly 4.416% on Friday, its highest level at any point in a day since January 2025, per Bloomberg. That undid Thursday's move, when the Treasury's official close put the two-year at 4.34% and the 10-year at 4.77% after Fed governor Christopher Waller said he could support leaving rates where they are. Stocks fell alongside bond prices Friday as traders raised their bets on an increase, per Wall Street Journal live coverage. The federal funds rate, the short-term rate the Fed sets and the base most other borrowing costs are built on, has sat between 3.50% and 3.75% since a quarter-point cut on Dec. 10, 2025.

A yield is the annual return a lender earns for holding a bond, and it moves opposite to the bond's price. Strong hiring means more paychecks, more spending and more room to raise prices, which makes a rate increase more plausible and a cut less so. A bond bought last year at a lower rate looks worse once newer bonds pay more, so holders sell, prices fall and yields rise. Stocks run on the same arithmetic in reverse. A share price is a claim on profits arriving over many future years, and those dollars are discounted to a value today using a rate anchored to what a safe Treasury pays. When that anchor rises, every future dollar is worth less now, which hits fast-growing technology companies hardest because their profits sit furthest out. It reaches the kitchen table too: Freddie Mac put the average 30-year fixed mortgage rate at 6.71% in the week ended Sept. 3, up from 6.50% a year earlier.

The case against reading too much into one month is real. Information employment, which covers publishing, broadcasting, web hosting and data processing, fell 23,000 in August, and the gain leaned on restaurants and school districts rather than the factories and offices that usually lead a growing economy. The participation rate, the share of adults working or looking for work, edged up to 61.6% but sits half a percentage point below January. Prices are the other half of the Fed's job, and August's consumer price index is not out yet; the most recent reading covers July 2026, when prices rose 0.1%. Chair Kevin Warsh's committee meets Sept. 15-16, and no one has voted yet.

Sources: U.S. Bureau of Labor Statistics · CNBC on payrolls · Bloomberg on Treasuries · WSJ live coverage · Freddie Mac mortgage survey · Rapunzl on Waller's September hold signal

Lululemon Cut Its Forecast For The Whole Year, Not Just A Bad Quarter

Lululemon reported fiscal second-quarter results after Thursday's close on Sept. 3. Revenue came in at $2.42 billion, down 4% from a year earlier and short of the roughly $2.46 billion analysts had expected on average. Comparable sales, which count only stores open at least a year plus online orders so new locations do not flatter the total, fell 9%. The Americas, still the company's largest market, shrank 8%, and sales in the leggings category the brand is best known for fell about 20%. The bigger news was the guidance, meaning the company's own forecast of its coming results. Lululemon now expects full-year revenue of $10.35 billion to $10.5 billion, a decline of 5% to 7%, after guiding to $11.0 billion to $11.15 billion. It also cut its adjusted earnings forecast to $9.48 to $9.73 a share from $10.95 to $11.15. The shares fell sharply Friday, with outlets reporting declines in the 15% to 18% range at different points Friday morning.

Here is why the forecast mattered more than the miss. A share price is not a grade on the quarter that just ended; it is the market's current estimate of all the profit a company will earn from here forward, converted into today's dollars. A revenue miss is one quarter that came in light, but a guidance cut of this size is the company saying the next several quarters will be smaller too, and Lululemon lowered its own earnings forecast by about $1.45 a share at the midpoint, roughly 13% below what it had told investors to expect. Investors were repricing the future, not the past.

Underneath the share-price arithmetic, this is a report on the customer. A 9% drop in comparable sales is not a shipping delay or a currency effect; it is people buying less of the same things from the same stores. Athletic apparel at these prices is a discretionary purchase, meaning one a household can put off without much consequence, and enough households put it off to show up in the annual forecast. Plenty of readers own something with this logo on it, and plenty work weekend shifts in stores that sell it. Incoming chief executive Heidi O'Neill inherits that customer, and the lowered forecast, on Sept. 8.

Sources: CNBC · WWD

Volkswagen Approved A Plan To Cut 50,000 More Jobs, And Its Shares Rose

Volkswagen's supervisory board, the panel of shareholder and employee representatives that signs off on the company's biggest decisions, approved a restructuring called Future Plan 2030 on Thursday, Sept. 3. Volkswagen describes it as the most extensive transformation program in its history. It assumes a further 50,000 positions come out of the group over roughly three years, taking the total announced to about 100,000, and it cuts the number of models the group sells by about half by 2035. The headcount figure is a consequence of a target rather than a target itself. Volkswagen wants a 9% operating margin by 2030, meaning nine euros of profit from running the business for every hundred euros of sales, and the works council that represents its workers calls the 50,000 a planning assumption derived from that goal rather than a fixed number of people to remove. Compulsory layoffs are ruled out through 2030 under the existing labor agreement, and the company has not said where the reductions fall or whether they come through buyouts or simply not replacing people who leave. Behind the plan sit lower-cost Chinese competition, high European energy costs, a model range the company considers too complicated, and U.S. tariffs on imported cars.

Volkswagen's ordinary shares, which trade in Frankfurt, rose about 6% on Friday. That reaction reads backwards until you apply the same rule the Lululemon story turns on: the price follows expected future profit. Costs coming out of a business, if sales hold up, leave more profit behind, so the expectation rises and the price rises with it. The same announcement is good news to a shareholder and bad news to someone whose job sits inside that 50,000, and both reactions are rational from where each person stands. That gap explains a great deal of market news that otherwise looks like cruelty.

Sources: CNBC · The Irish Times · CNN

What To Watch

Monday, Sept. 7 is Labor Day. U.S. stock and bond markets are closed, so the next full session is Tuesday.

Reporting Tuesday, Sept. 8. All consensus estimates, the average of what analysts expect, not results:

• Casey's General Stores (CASY), after the close, is expected at $6.59 a share against $5.77 a year ago.
• ABM Industries (ABM), before the open, is expected at $1.01 against $0.82.
• United Natural Foods (UNFI), before the open, is expected at $0.62 against a loss of $0.11.
• GameStop (GME) is on the calendar without a published estimate.

Later this month:

• The Fed's next interest-rate meeting is scheduled for Sept. 15 and 16, with a press conference expected at 2:30 p.m. ET on the 16th.
• The August consumer price index lands before that meeting, and it is the reading that speaks to the inflation side of the decision.
• The Fed's consumer credit report, which tracks what Americans owe on credit cards and car loans, is expected Sept. 8.