US-Iran Talks Remain Deadlocked as Weak Payrolls Trigger Market Repricing

Daily News

Summary:

Iranian Foreign Minister Abbas Araghchi reiterated that Iran is not currently negotiating with the United States; US nonfarm payrolls unexpectedly fell by 23,000 in July...

【Highlights】

1. Iran: Reopening the Strait of Hormuz requires the US to meet five conditions

2. Iranian Foreign Minister reiterates that Iran is not currently negotiating with the US

3. Iran’s Supreme Leader meets with the president

4. US vows to maintain pressure on Iran as Tehran demands compensation from Washington

5. Iran and Oman near the end of negotiations on a temporary shipping route through the Strait of Hormuz

6. US Senate advances a stopgap spending bill to avert a government shutdown

7. US nonfarm payrolls unexpectedly fell by 23,000 in July

8. Trump moves to remove Fed Governor Lisa Cook, formally initiating the process on grounds of “gross misconduct”

9. New York Fed survey: US consumers become more optimistic about employment and inflation

【Details】

Iran: Reopening the Strait of Hormuz requires the US to meet five conditions

Zolfaghari, secretary of Iran’s Supreme National Security Council, said the Strait of Hormuz would remain closed unless the United States changes its behavior. He said reopening the strait would require Washington to meet five conditions, including a permanent halt to military operations against Iran.

The conditions include permanently ending military operations against Iran and its regional allies, ceasing threats and insults against Iran, lifting the maritime blockade and all sanctions against Iran, returning Iran’s frozen assets, and compensating Iran for losses caused by related military operations.

Iranian Foreign Minister Abbas Araghchi said Iran and Oman were close to reaching an agreement, but stressed that this would not necessarily mean the Strait of Hormuz would be reopened. The reopening of the strait would depend on other conditions, including compensation from the United States for violating the memorandum of understanding.

Iranian Foreign Minister reiterates that Iran is not currently negotiating with the US

Iranian Foreign Minister Abbas Araghchi said on August 9 that Iran and the United States were not currently engaged in negotiations, although mediators were still working to find a way to resume talks. Iran believes that negotiations cannot be restarted until the United States makes amends for its previous violations of its commitments.

Iran’s Supreme Leader meets with the president

According to Iran’s Tasnim News Agency, Iranian President Masoud Pezeshkian met with Iran’s Supreme Leader and Commander-in-Chief of the Armed Forces, Mojtaba Khamenei, on August 9.

The two discussed Iran’s current economic and military situation, with a focus on ensuring basic living needs, the ongoing conflict and its future trajectory, the latest developments in the military sphere, and the management of domestic currency, foreign exchange and energy resources. They also discussed economic cooperation between Iran and foreign countries.

US vows to maintain pressure on Iran as Tehran demands compensation from Washington

US Vice President JD Vance said on August 8 that the US-Iran conflict was not over and that the two sides remained in the middle of a broader confrontation. He said Washington would continue to apply pressure on Iran.

Iran, meanwhile, said the issue of navigation through the Strait of Hormuz would not be determined by statements from Washington. Even an agreement with Oman would not necessarily mean the strait would be reopened. Iran’s conditions include compensation from the United States for violating the memorandum of understanding, among other demands.

According to Li Jiannan, a reporter based in Tehran, analysts in Iran believe that although the conflict and war have negatively affected Iran’s domestic economy, Tehran is unlikely to easily give up the Strait of Hormuz as an important means of countering US pressure. Unless Washington changes its hostile policy and makes substantive concessions on the Iran issue, Iran will not sacrifice national security in exchange for temporary economic relief.

Iran and Oman near the end of negotiations on a temporary shipping route through the Strait of Hormuz

Iranian Foreign Minister Abbas Araghchi told the media that negotiations between Iran and Oman over a temporary transit route through the Strait of Hormuz were nearing completion, with the two sides working together to finalize the specific route.

Araghchi acknowledged the technical complexity of the negotiations but emphasized that the two sides were very close to reaching an agreement. He also clarified that an agreement with Oman would not necessarily mean the Strait of Hormuz would reopen. The reopening of the strait depends on other conditions, particularly arrangements for US compensation over violations of previous commitments.

The statement further links the issue of navigation through the strait to the broader political confrontation between Iran and the United States.

US Senate advances stopgap spending bill to avert government shutdown

The US Senate has secured enough votes to advance a procedural vote on a stopgap spending bill. The legislation is intended to provide funding for the federal government and prevent a government shutdown on October 1.

Passage of the bill would provide additional time for subsequent budget negotiations. The vote is still underway, and markets are closely watching the final outcome.

US nonfarm payrolls unexpectedly fell by 23,000 in July

The US Department of Labor reported that nonfarm payrolls fell by 23,000 in July, compared with market expectations for an increase of 80,000. The US unemployment rate was 4.1%, versus expectations of 4.2%.

Private-sector payrolls increased by 30,000, compared with expectations for a gain of 78,000. Manufacturing payrolls rose by 5,000, versus expectations for an increase of 4,000, while government payrolls fell by 53,000. Average hourly earnings increased 0.1% month over month, below the 0.3% expected gain. Average weekly hours stood at 34.3, in line with expectations.

The latest payrolls report completely disrupted the market’s previous trajectory. The figures were far weaker than even the most pessimistic expectations and immediately triggered sharp repricing in the interest-rate futures market.

The labor market has long been one of the Federal Reserve’s key indicators for assessing economic health. Markets had previously expected the labor market to slow somewhat while remaining resilient enough to support another rate hike by the Fed in September. However, the negative payrolls growth, combined with substantial downward revisions to previous data, has challenged the narrative of a “soft landing” for the US economy.

Following the release, interest-rate futures reacted sharply. The probability of a Fed rate hike in September fell from 57% before the report to 44%, while the probability of leaving rates unchanged rose from 43.2% to 56%.

Trump moves to remove Fed Governor Lisa Cook, formally initiating the process on grounds of “gross misconduct”

According to reports, sources familiar with the matter said President Donald Trump was moving forward with efforts to remove Federal Reserve Governor Lisa Cook from office. Sources familiar with the letter said the White House wrote to Cook this week, informing her that Trump was considering removing her from the Fed’s Board of Governors and giving her three weeks to respond to the allegations.

The move comes after a Supreme Court ruling in June that upheld restrictions on the president’s ability to remove members of the Federal Reserve.

Following the ruling, Trump said he would immediately take appropriate action to remove Cook. He now appears to have followed through on that pledge, formally initiating the removal process on grounds of gross misconduct based on mortgage fraud allegations that have not yet been adjudicated in court.

The letter was signed by White House Deputy Chief of Staff Dan Scavino, who argued that even if the allegations did not constitute a crime, Cook’s conduct amounted to misconduct. Cook’s attorney, Lowell, said in a statement that the allegations were baseless and that they would challenge what he described as the latest pretext for the removal effort.

New York Fed survey: US consumers become more optimistic about employment and inflation

A survey released by the Federal Reserve Bank of New York on Friday showed that Americans’ overall expectations for the labor market improved in July, while their expectations for future inflation declined.

The survey found that the perceived probability of finding a new job after becoming unemployed rose to 46.2%, the highest level so far this year. The improvement was particularly pronounced among respondents with a high school education or less and those with annual household incomes below $50,000.

Meanwhile, consumers’ expectations for inflation over the next year edged down to 3.6% from 3.7%. Inflation expectations for the next three and five years remained unchanged at 3.3% and 3%, respectively.

Consumers remained concerned about overall labor-market conditions, however. The average perceived probability that the unemployment rate would rise over the next year increased, with the upward trend evident across age and income groups.

Respondents also saw a slight increase in the likelihood of losing their jobs over the next year, although the figure remained below its 12-month average.

【Today’s Focus】

16:30 (UTC+8) Eurozone August Sentix Investor Confidence Index

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