The US economy shed 23,000 jobs in July, primarily concentrated in occupations in leisure and hospitality and government. With this latest piece of evidence pointing towards a cooling labour market, traders have scaled back bets on the Federal Reserve raising interest rates in September. Before the jobs data were released, markets were pricing in a roughly 60 per cent chance of a quarter point rate rise next month; the market-implied probability now sits at around 44 per cent. The employment figures come as markets weigh up the US central bank’s ability to keep inflation under control, in light of cost pressures stemming from the war in the Middle East. For now, hostilities between Iran and the US have halted, but the Islamic Republic has motioned for the US to withdraw its forces around the Strait of Hormuz, pay compensation for war damage, and lift its sanctions before it agrees a deal to open the waterway. Brent crude oil currently sits at around $83.6 per barrel, 15 per cent above pre-conflict prices, while the US CPI for gasoline has increased by 36 per cent since February 2026. Fed chair Kevin Warsh is yet to offer any explicit guidance on how the central bank would contain price pressure derived from the prolonged period of elevated crude oil and gasoline prices.