Trump 1, Powell -1: Since June we have been surprised at the difference between actual NFP and our estimates. But when in the last NFP, previous 2 month's nos were revised downward by 258k, our conviction was proved right. For Aug NFP we had predicted 40k last week: x.com/MacroSpectrum/… Today actual no was 22k. Previous two months were further revised downward by 22k. June was revised down by 27,000 from +14,000 to -13,000, and July was revised up by 6,000, from +73,000 to +79,000. UR unrounded came at 4.324 at a LFPR of 62.3. Had the LFPR been at 64, which was the case for a long time, UR will have been north of 4.5%. Manufacturing jobs fell by 12,000 and are now down by 78,000 over the year. So much for returning manufacturing back to US. Employment in health care and social assistance rose by about 47,000 in August. That’s the smallest monthly increase since January 2022. It’s arguably a big warning sign for the wider labor market given the sector has accounted for more than 40% of all new jobs over the last three years. Today's NFP confirms what we have been projecting for last 3 months. US employment is in a fragile state. If a corporate BS gets squeezed on margins, first response is to cut elastic labor costs. The resultant casualty is wage gains. Average weekly hours unexpectedly declined, to 34.2 hours. That’s a potential sign of employers’ demand for labor weakening. 0n Sept. 9, once we get the annual preliminary benchmark revisions, that’s going to be revised down to the tune of something like 600,000 — that’s going to be another really bad negative headline. All our targets have been achieved on 2yr UST (3.5%), 1yr-1yr US SOFR at 2.87 and 10yr UST at 4.10. We had given these calls in the opinion piece below "US rates lower for longer" on 23rd Aug: x.com/MacroSpectrum/… The weakness in payroll data can no longer be ignored or chalked up as a one-off. The trajectory of most of labor categories reported has been lower and slower for almost half of the year. Our neutral rate of NFP is 75k and we are currently 50k below it. Implies significant downturn for US GDP going ahead. We continue to expect 75 bps cut in REMCY25 and another 50 bps cut in Q1CY26. This has been our view when 10yr UST was 4.5 & markets priced in only 40 bps of cuts in CY25. If the Aug CPI due on 11th sep comes at our estimate of .26 % MoM, we believe we are in for a 50 bps cut in Sep meeting itself. Even if it is a 25 bps cut, it will be a remarkably dovish 25 bps cut. We see now another down leg in DXY. We like being long JPY against USD. We see 140 by Dec end as we expect a 25bps hike by BOJ in it's 30th Oct meeting. In Japanese data released today, nominal cash earnings rose more than expected in July to a seven-month high at 4.1% y/y (consensus: 3.0%) vs. 3.1% in June, reflecting a jump in bonus payments. We believe PM Ishiba wont resign which is being priced in JPY currently. The US Japan trade deal is signed now and he will want to remain so as to ensure the execution. BOJ was waiting for clarity on trade front which is now there. Hence the Oct rate hike. We don't see any trading opportunities in US rates currently. We believe US rates will be the isle of peace while others (German long end due to fiscal expansion, UK & France because of fiscal concerns, Japan because of delayed BOJ hikes) will suffer. So the next trade opportunity will be spreads between US rates and these laggards on a tactical basis. We will soon release a detailed report on this.