Traders sharply repriced the interest-rate outlook after a run of contradictory signals from the Federal Reserve and fresh evidence of a cooling U.S. labor market. Fed funds futures on July 30 trimmed the likelihood of a September policy easing to about 45% from nearly 70% after Chair Jerome Powell, speaking following the Federal Open Market Committee’s decision to keep the target range unchanged, said “no decisions” had been made on forthcoming meetings. The mood turned within 48 hours. Labor Department data on Aug. 1 showed payrolls rising by just 73,000 in July, while May and June job gains were revised down by a combined 258,000. The weaker-than-expected figures triggered a swift rally in rate-cut wagers: CME FedWatch and prediction-market platforms such as Kalshi and Polymarket now assign roughly a 75%-plus probability that the Fed will lower its benchmark rate by 25 basis points at the Sept. 17-18 meeting, and futures fully price at least one additional cut by October. Beyond the near term, derivative markets are again assuming two quarter-point reductions by the end of 2025. Softer U.S. data also spilled into Europe, where money-market pricing for an initial European Central Bank cut in March 2026 rose to about 80%. The rapid swing in expectations underscores investors’ sensitivity to incoming macro data as policymakers gauge whether inflation is slowing fast enough to permit looser monetary settings.