U.S. President Donald Trump commented after the August non-farm payroll report: growth does not cause inflation, stupidity does; today's employment figures far exceeded expectations, and the stock market should have risen instead of falling.

The Bureau of Labor Statistics reported that non-farm employment increased by 162,000 in August, significantly higher than the market expectation of about 55,000 to 56,000, with the unemployment rate steady at 4.1%. He called this an "excellent employment number" and blamed the market for weakening due to inflationary thinking upon seeing good data.

The three major indices subsequently fell. During the session, the Dow Jones dropped about 0.3% to 0.7%, the S&P 500 fell about 0.2% to 0.5%, and the Nasdaq had a smaller decline; the yield on the 10-year U.S. Treasury rose to about 4.77%, and CME Fed Fund futures indicated the probability of a 25 basis point rate hike on September 16 increased from about 49% the previous day to about 58% to 65%.

Inflation remains above the Federal Reserve's 2% target. The July CPI year-on-year was about 3.4%, with PCE readings even higher; inflation has been above the target for about 65 consecutive months. He also demanded that the U.S. should enjoy the lowest interest rates globally, stating that for every 1 basis point increase, U.S. debt interest payments rise by about $65 billion annually.

The White House narrative frames strong employment as credit improvement, while the market interprets the same set of data as giving the Fed more room to prioritize combating inflation. The previous day, Fed Governor Christopher Waller had signaled "if prices continue to cool, we can hold steady," leading to a brief rise of over 1% in stock indices, which was countered today by the better-than-expected employment figures.

In market mechanics, buyers are still betting on AI capital expenditures and large tech funding, while sellers are interest rate-sensitive growth stocks and duration assets. This is typical data-driven trading: better-than-expected employment raises the probability of rate hikes, increasing the discount rate and lowering valuations. Beneficiaries are short-term dollars and some banks' net interest margin trades, while those under pressure are the stock market and fiscal interest expenses reliant on low-rate discounts.

Source: Public Information