S&P 500 Shatters Records at 6,502.08 as Weak Jobs Data Ignites Fed Rate Cut Frenzy for September

Wall Street's benchmark index just blasted into uncharted territory—fueled entirely by bad news.

Rate Cut Mania Returns

Traders are piling into bets that the Federal Reserve will slash rates next month after disappointing employment numbers hit the wires. The S&P 500 surged to a historic 6,502.08 close as weak job data became the market's perverse catalyst for celebration.

Pavlov's Investors

Once again, Wall Street proves it'd rather feast on economic weakness than strength—because nothing says 'healthy market' like cheering for bad data that might trigger more monetary morphine. The financial world's addiction to cheap money continues unabated, with traders now pricing in September cuts as their next fix.

Fed rate cut bets explode after ADP report

Markets responded instantly. Traders raised the odds of a rate cut on September 17 to 97%, based on CME Group’s FedWatch tool. They’re pricing in the idea that the Fed now has enough cover to make a move.

Equities moved higher across sectors on the idea that weak data means looser policy, the scenario traders have been waiting on for months.

The United States is running on surging debt, rising deficits, and growing interference in the central bank’s independence.

Despite all that noise, the U.S. Treasury market has held its ground, with the 10-year yield having dropped more than a third of a point this year, standing in contrast to higher yields in the UK, France, and Japan, where investors have pulled out amid fiscal concerns.

10-year U.S. Treasury yields have dropped over 0.33% this year, beating every other major bond market. Even 30-year U.S. bonds only went up about 0.125% in 2025, way less than the 0.5% spike in the UK, 0.75% in France, and a full 1.0% in Japan. While Europe and Asia struggled with rising debt fears, U.S. bonds stayed firm.

Bond volatility has also been fading. A key measure of Treasury market swings is now sitting close to its three-year low, showing that traders aren’t panicking… yet. That’s despite all the pressure Washington is putting on the Fed to keep rates low and borrowing cheap.

Ed Yardeni, founder of Yardeni Research, said, “The bond market has been calm.” He added that even with heavy fiscal overhang and political meddling, the U.S. still “does stand out as remarkably stable.” Yardeni is known for coining the term “bond vigilantes” in the 1980s to describe investors who punish reckless fiscal policy by dumping government bonds. But right now, he says that group is nowhere to be seen in America.

Bond market braces for QE pressure from Trump team

Still, there are signs the calm might not last. The 10-year note recently dipped below 4.17%, the first time since May, just as more data hint at slower job growth. With Europe on pause and Japan looking to raise rates, the pressure is building in the U.S. to do something.

Stephen Jen, chief executive at Eurizon SLJ Capital, predicts that:

“The next pressure may be on QE, and if I were in the TRUMP administration, I would just put pressure on the Fed to consider re-adopting it.”

William Dudley, former New York Fed President, told Bloomberg TV, “The markets are still pretty comfortable about this. Probably a little too comfortable, given the fact of the president trying so hard to influence monetary policy. But how this plays out, there’s a long way to go.”

Pimco’s Michael Cudzil added that the Fed could also start reinvesting maturing mortgage-backed securities as a way to cool off housing markets.

Right now, the Fed is doing the opposite, letting up to $5 billion in Treasuries and $35 billion in mortgage debt mature each month without reinvesting, a policy known as quantitative tightening.

Yardeni warned that any Fed MOVE to buy bonds or change Treasury issuance might only buy time. Unless Congress starts cutting spending or raising taxes, the U.S. may lose the patience of investors. And when that happens, it won’t be a press release, it’ll show up in the market.

“Bond vigilantes are in Europe and Japan,” Yardeni said. “They are out there, just not here. That could change pretty quickly.”

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