US Risk Assets Hold Steady After Strong August Jobs Data Lifts Yield Curve

The jobs print shifted market-implied odds of a September Fed cut below 40 percent and extended the selloff in duration assets. Equity and credit desks absorbed the repricing without forced liquidation, as corporate balance-sheet cash flows and persistent equity-fund inflows offset higher discount rates. Primary dealer data showed net long equity exposure unchanged week-over-week.

This resilience follows the pattern observed after the 2024 Q4 and 2025 Q2 payroll beats, when risk assets decoupled from rates once earnings revisions turned positive. The current episode differs in that real-rate volatility has been higher, yet option-adjusted spreads on BBB credits have compressed 8 basis points since the release, indicating demand for carry remains intact.

Forward indicators point to sustained pressure on the front end of the curve if September CPI prints above 2.8 percent year-over-year. A further 20 basis point rise in 2-year yields would test whether equity valuations can absorb an additional round of policy repricing without volume contraction.

Central-bank communication after the Jackson Hole symposium and the September FOMC dot plot will supply the next discrete test of whether the observed market equilibrium persists.