Jobs Report Shows Trouble Brewing and As We Said, Expect 50bp Cut on Sept. 17th

Subscriber Data for Sep5 2025

Good evening MTR readers, we hope you are having a relaxing and enjoyable Sunday evening. We wanted to get this note out tonight as a follow up to our Thursday night post where we highlighted the NFPayroll report and our expected weaker than expected jobs result. Well the number did not disappoint our expectations coming in at +22k expecting +75k or so however we know after all the revisions this number will be heavily negative. Look at the U6 unemployment rate, now up 22% from its lows to 8.1% now:

Source: ZeroHedge

We noted the CME Watch tool which didn’t even show any expectation for a 50bp cut for Sept. prior to Friday’s number but we certainly expect it would after the number and here is the latest figure showing odds at 8%:

Source: CME Group

We expect this to rise as we get closer to the meeting, but we have always said that a 50bp cut is appropriate given the 2y yields and the spike in the 2s30 and 5s30 interest rate curves.

We have highlighted this yield curve steepening and 2Y yields and here are the latest charts. You can see the 2Y has broken down out of this long standing trend line and we suspect this is just the start of a more prolonged decline toward 1%:

As far as the yield curve you can see the steepening of the curve compared to its prior yield lows and highs:

We continue to laugh at the main stream economists and academics out there that have zero clue on how the bond market apparently works. In fact we have noted a few times how the main stream uses the long end of the bond curve to state the bond market continues to fear inflation that 30Y rates are elevated, well as you can see from the prior yield curve data, just focusing upon the 30Y doesn’t really paint an accurate picture at what the bond market participants are actually betting on.

The 30Y should be weak as any reasonable hedger for a rate cut cycle is actively engaging in selling the 30Y (keeping yields higher) as a hedge to all their longs in the front end or SOFR on out to 7s and maybe even 10s. We doubt there are a lot of these types of traders out there actively anymore as everything has been relegated to large balance sheet type HFs and Prop firms and no not those cheesy fake wannabe prop firms I keep hearing about, real ones like Transmarket Group, the firm I spend over 12 years with. Anyway here is the 30Y and now main stream will start to see the light because even the 30Y is starting to break lower in yields, 4.80% could start to accelerate the decline in yields here very, very quickly:

For those that don’t have the capital to play the US treasury cash markets or futures markets, you can represent these same trades in ETF land by using products like, the TLT, IEF or even ZROZ. If you are in the long bias, yields will continue to fall camp then you should utilize these products in your arsenal of investing choices. Here we go over some brief snippets of these products.

1. iShares 20+ Year Treasury Bond ETF (TLT):

• TLT tracks the performance of U.S. Treasury bonds with maturities of 20 years or more.

• It has a longer duration, meaning it's more sensitive to changes in interest rates. A decline in yields will typically lead to a larger increase in the price of TLT compared to shorter-duration bonds.

• If you expect yields to fall, holding TLT allows you to benefit from the price appreciation due to its high duration.

2. iShares 7-10 Year Treasury Bond ETF (IEF):

• IEF tracks U.S. Treasury bonds with maturities between 7 and 10 years.

• It has a moderate duration, making it less sensitive to interest rate changes than TLT but still responsive.

• Investing in IEF when you anticipate lower yields can still yield price gains, though not as pronounced as TLT due to the shorter duration.

3. PIMCO 25+ Year Zero Coupon US Treasury Index ETF (ZROZ):

• ZROZ focuses on zero-coupon Treasury bonds with maturities of 25 years or more.

• Zero-coupon bonds are particularly sensitive to interest rate changes because they do not pay periodic interest; instead, they are sold at a discount and mature at face value. A drop in yields can significantly increase their price due to the long duration and the compounding effect of not receiving interim payments.

• ZROZ is an even more aggressive play on falling yields due to its extreme duration.

Strategic Considerations

• Duration Risk: The longer the duration of the ETF (TLT and ZROZ have longer durations than IEF), the greater the price volatility in response to yield changes. This means higher potential gains if yields fall but also higher potential losses if yields rise.

• Yield Curve Expectations: Your expectation that yields will move lower should be based on your view of the yield curve. If you believe long-term yields will fall more than short-term yields, TLT and ZROZ might be more appropriate. If you think the entire yield curve will shift down, IEF could also be a good choice.

• Portfolio Diversification: These ETFs can be part of a broader strategy to express a view on interest rates, but consider balancing with other assets to manage risk.

As an example to expressing the scenario that we believe the Federal Reserve will cut rates in September 2025, leading to lower yields across the Treasury curve. You could allocate to TLT, IEF, and ZROZ based on your risk tolerance and duration preferences:

• TLT for maximum sensitivity to long-term yield changes.

• IEF for a balance between sensitivity and stability.

• ZROZ for an aggressive bet on very long-term yield declines.

As far as the US Govt 10Y our bull/bear pivot was breached on the weekly and this now means the bulls should be in control here to continue to press yields lower as we approach the FOMC meeting:

Alright let’s move out of bond land and see how the QQQ ETF and the Nasdaq futures closed out the week. First up the QQQ as we noted on Thursday’s note, it wouldn’t surprise us to see a test of the 581 area and rejection into the close and this is exactly what we got as 518.12 was the high on the day and it settled at 576.06:

As far as the Nasdaq futures we target our resistance this week at 23900 and support at 23275 and 22800 is our bull/bear pivot. The Moving Averages are converging here so the catalyst for a move is growing and probably timed well with the FOMC meeting:

We want to also post our SP500 futures chart, this one is coiling up as well:

We also wanted to look at the Dax Futures chart, let’s just say 23500 is massive:

Ok so this week we have the CPI numbers on Thursday to look out for and we will continue to expect the main stream news outlets to be baffled by an FOMC that will now be cutting rates. Oh we almost forgot take a look at Lululemon, we highlighted this also last week about going back in time because its trading at 2019 prices, well, earnings didn’t help. We have warned about this company for quite sometime, their prices out of touch with reality, their lack of understanding of their core consumer base and the threat of new entrants like Alo. Well here is the chart and we heard the CEO on CNBC as well, no wonder the company is going down the tubes, their leader is no Brian Niccol, that’s for sure! Guess all that stimulus money has run out and student loans kicking in again…going to be a tough climb for this company:

Ok that is it guys time for the subscriber only section where we provide all the days data, all our trading trend sentiments and cover Strategy Inc’s endless endeavor into Bitcoin. By subscribing we believe that if you are proactive and start implementing some of the things that we present, you will not only improve your odds of winning but also gain an invaluable mindset to take through all facets of your life. So think about subscribing and becoming a supporting member, at the least share our work if you can! We have adopted a new pricing model to where everyone should be able to support our work and assist us in our endeavors to continue to educate the masses as to how our monetary mechanisms truly work!

Cheers,

Magnelibra

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