Nonfarm Payrolls Tripled Expectations: Rate Hike Back on the Table

The August nonfarm payrolls data released today at 15:30 TRT by the US Bureau of Labor Statistics showed the exact opposite of the scenario priced in by the market. Employment increased by 162,000, while the market expected around 55,000. July’s previously reported loss of 23,000 was revised upward into positive territory.

The unemployment rate remained unchanged at 4.1%. Average hourly earnings increased 0.3% month-over-month and 3.1% year-over-year — in line with expectations and indicating that wage-driven inflationary pressure has not accelerated. Initial jobless claims for the week of August 29 came in at 206,000, remaining within the general range seen throughout the year.

Reaction Function Reversed

Throughout 2024 and 2025, the market’s reaction function was simple: weak employment meant rate cuts and increased risk appetite. In September 2026, the equation is working in reverse. Since a rate hike rather than a cut is now on the table for the Fed’s next move, strong data produces a hawkish outcome, while weak data is dovish.

Two names are behind this reversal. Fed Chair Kevin Warsh struck a clearly hawkish, inflation-focused tone in his first speech at Jackson Hole last week, pushing the probability of a September rate hike to 63% in market pricing. This week, however, Fed Governor Christopher Waller said he would favor keeping rates unchanged if price pressures continued to ease, pulling expectations down toward 50%.

Today’s data tipped the balance back toward the hawkish side. In futures markets, the probability of a 25-basis-point hike at the September 16 meeting rose to the 59-60% range from around 52% before the data.

Bonds and the Dollar

The initial reaction was seen in interest rates. The US 10-year Treasury yield rose to 4.80%, while the 2-year yield climbed to 4.40%. The move in short-term yields is the clearest signal that Fed pricing has shifted.

The dollar index strengthened following the data. However, an important distinction needs to be made here: the global bond selloff is being driven not only by rate expectations but also by concerns over fiscal discipline. When yields rise because of budget concerns rather than growth, the same rise does not always mean a penalty for non-yielding assets — gold’s performance throughout the year supports this thesis.

Gold: Pressure Below $4,500

Spot gold fell more than 2% following the data, retreating to around $4,470. Silver losses exceeded 3%. The logic is straightforward: when real yields rise, the opportunity cost of holding a non-interest-bearing asset increases.

Still, the picture should not be viewed through a single day. Gold is up more than 5% over the past month and 24% year-over-year, while attempting to hold the $4,500 area. Today’s selling appears to be a correction combining profit-taking with the rally that continued throughout August. The critical threshold is $4,400; sustained trading below this level would raise questions about the medium-term uptrend. Above, reclaiming $4,500 would indicate that the data shock was limited to a single day.

Domestic gold prices did not fall as sharply as spot gold due to USD/TRY trading around 48.44, holding near the TRY 6,960 area. The exchange rate is absorbing part of the decline caused by spot gold.

Equity Markets: Good for Growth, Bad for Multiples

The reaction in US equity indices remained measured. The S&P 500 and Dow opened slightly lower, while the Nasdaq traded flat. This divergence summarizes how the market is interpreting the strong employment is positive for growth, but it creates discount-rate risk for high-multiple, rate-sensitive stocks.

Gold miners and crypto-related stocks were among the hardest-hit groups of the day. Since both are priced directly through rate expectations, they reflected the underlying asset moves with leverage.

In Türkiye, the BIST 100 opened Friday at 13,911 after closing Thursday at 13,932 with a 0.84% loss, then recovered to 13,959 around midday. For the index, 13,800 and 13,700 are support levels, while 14,000 and 14,100 are resistance. The impact of deteriorating global risk appetite on the BIST remained limited; domestically, the real effective exchange rate data stood out.

Crypto: Return Below $80,000

Bitcoin fell 2-3% immediately after the data was released, dropping below $80,000 to around $79,300. Before the data, it had been trading in the $81,000-$82,000 range. The decline was accompanied by liquidations of leveraged long positions.

The main tension here is the conflict between institutional flows immediately before the data and the post-data macro pressure. Spot Bitcoin ETFs recorded $731 million in inflows on September 3 — the highest daily figure since January. Total net ETF assets exceeded $103 billion for the first time. In other words, the buyer base that pushed the price toward $82,000 is still there; whether this base maintains its positions during the post-data selling wave will be the key question in the coming days.

Technically, $80,000 is a psychological and structural threshold. Reclaiming this level at the daily close would indicate that the reaction has been absorbed; sustained trading below it would bring the $76,000-$77,000 area into focus. Ethereum and major altcoins fell more sharply than Bitcoin — a familiar pattern during macro shocks, although recovery generally tends to lag by a similar margin.

The Real Test: September 11 CPI

Today’s data represents only half of the picture for the Fed. The other half will be August consumer inflation, due Friday, September 11 at 15:30 TRT. The timing is critical: the FOMC meeting takes place on September 15-16, meaning the Fed will have only five days to digest the inflation data before making its decision.

The Cleveland Fed’s nowcast model forecasts headline inflation to ease slightly to 3.38% in August. The real risk, however, is on the core side: core projections are moving higher as tariff-driven price pressures become embedded in core components. A combination of falling headline inflation and accelerating core inflation would be the most difficult scenario for the Fed to interpret.

The test Waller has clearly laid out is this: if improvement in inflation continues, he will favor keeping rates unchanged; if renewed inflationary pressure appears, he will support a hike. Therefore, a single core inflation figure released next Friday could effectively determine the September decision.

What to Watch Next Week

The market’s focus has now shifted from growth to price stability. A “good” employment report is not automatically positive for risk assets; on the contrary, as long as the labor market remains resilient, the justification for the Fed to maintain a tight stance becomes stronger.

Three variables will be decisive in this environment: whether the 2-year Treasury yield remains above 4.40%, the direction of the dollar index, and the monthly reading for core CPI on September 11. For gold and Bitcoin, these three factors will matter more than technical levels.

A rise in the probability of a rate hike to 60% does not mean the hike is certain — the market is still pricing the decision almost like a coin toss. However, the direction of the risk has clearly changed: in September 2026, the risk is no longer simply delayed easing, but a return to tightening.

This content is for informational purposes only and does not constitute investment advice.