The labor market cooled again in August. The bond market did not care.
Private employers added 38,000 jobs last month, ADP reported Wednesday morning, well short of the 47,000 economists expected and down from a downwardly revised 46,000 in July. It was the slowest month of private hiring since January. In an ordinary cycle, a miss like that would send Treasury yields lower on expectations of easier policy. Instead, the 10-year Treasury yield climbed to 4.814 percent, its highest level since November 2023, before settling near 4.79 percent.
Inside the ADP Report
The gains that did materialize were narrow. Education and health services, leisure and hospitality, and construction accounted for most of the month's additions. Manufacturing went the other way, shedding 17,000 jobs — a decline that squares with the softer new-orders and employment readings in Tuesday's ISM survey.
Pay growth, the piece of the report the Federal Reserve watches most closely, stayed firm. ADP Pay Insights showed base pay up 3.2 percent year over year and gross pay up 4.7 percent. Workers who switched jobs saw base pay rise 4.7 percent, against 3.0 percent for those who stayed put — a spread that suggests employers are still paying up to poach, even as the overall pace of hiring thins out.
A Global Bond Selloff, Not an American One
The move in yields was not really about ADP. It was about supply, energy and inflation, all at once, in nearly every developed market.
Japan's 10-year government bond yield touched 3 percent on Tuesday for the first time since 1996, a milestone for an economy only recently out of its ultra-low-rate era. Britain's 30-year borrowing costs sit at 30-year highs. German 10-year yields are at levels last seen in 2011, and French yields at levels last seen in 2008. The U.S. 30-year traded at 5.27 percent, near multidecade highs, while the 2-year was roughly flat at 4.4 percent — a steepening that points at term premium and fiscal risk rather than at the Fed's next move.
"Global bonds are facing a perfect storm of rising inflation fears, driven by higher energy prices, which are in turn raising rate hike expectations," said Leon Ferdinand Bost at Metzler.
The energy piece is live. U.S. forces struck Iranian air defense and communications infrastructure this week, and Iran said it had begun a "decisive operation" against American bases in Jordan and Bahrain. West Texas Intermediate settled at $89.58, down 0.71 percent on the day but still near six-week highs, with Brent above $94. Corporate supply is adding to the pressure: the five largest AI hyperscalers — Alphabet, Amazon, Meta, Microsoft and Oracle — have issued roughly $220 billion of debt this year, more than double last year's total.
Stocks Shrugged
Equities took the weak jobs print as the dovish half of the story. The Dow Jones Industrial Average closed at 53,059.68, up 292.80 points or 0.55 percent. The S&P 500 added 0.24 percent to 7,649.78, the Nasdaq Composite edged up 0.06 percent to 26,114.82, and the Russell 2000 rose 0.73 percent. Gold gained 0.62 percent to $4,423.80. Bitcoin fell 1.38 percent to about $77,067.
Futures still price roughly a 66 percent chance of a quarter-point hike at the September 15-16 FOMC meeting, largely on the strength of Fed Chair Kevin Warsh's Jackson Hole commitment to bringing inflation down. Friday's August employment report is the last major data point before the Fed's pre-meeting blackout — and the first real test of whether a cooling labor market can outweigh an energy shock in Warsh's calculus.
Sources: ADP National Employment Report (August 2026) and ADP Pay Insights, CNBC, Yahoo Finance, Fox Business, Nikkei Asia, Reuters