Speculative bets on interest rates have experienced intense movements driven by the latest U.S. economic data, which reveal uncertainties about the resilience of the world’s largest economy. Last week, the unemployment rate unexpectedly increased from 4.1% to 4.3% in July, reaching its highest level since October 2021, while the pace of job additions slowed significantly, falling short of economic estimates. These cooling labor market indicators exacerbated fears of a manufacturing contraction, as reflected in the latest ISM Manufacturing PMI for July. The Federal Reserve had already hinted at a potential rate cut, with Chairman Jerome Powell stating, “I would think that a rate cut could be on the table at the September meeting.” When recession concerns permeate the markets, traders tend to increase their bets on interest rate cuts. By Monday morning, interest rate futures had fully priced in a 50-basis-point rate cut in September. Chicago Fed President Austan Goolsbee did not ...