Weak NFP Flips Fed Bets, but Oil Keeps Markets Trapped in Tug-of-War

The article argues that a shockingly weak July US nonfarm payrolls report materially shifted Fed expectations toward holding rates in September, but it did not trigger a full dovish repricing because oil-linked inflation risks remain elevated. Brent crude stayed above $80 after hopes for a Strait of Hormuz resolution faded, leaving markets trapped between slowing growth and persistent inflation pressure. Treasury yields and the Dollar Index both held key technical support rather than breaking down decisively, signaling investors are not yet convinced the Fed can safely pivot. Equities reacted only mildly positively, with the Dow and S&P 500 posting modest gains and the Nasdaq outperforming, suggesting investors viewed the labor data as a growth warning rather than a clean rate-cut catalyst. Overall, the market is in a tug-of-war where weaker employment argues against further tightening, while elevated oil prices keep inflation concerns alive and limit risk-on conviction.