US unemployment is up; what could it mean for fixed income?

The US jobless rate unexpectedly rose in August 2025 to 4.3% from 4.2% the month before.

Whilst a small rise, it goes against many signs that the US economy had a strong job market. It’s the highest it has been in 12 months.

Unemployment rates affect core fixed income investments, as a weak jobs report typically suggests economic softening.

This could prompt the US Federal Reserve to lower interest rates, which in turn could increase demand for fixed-income assets and cause their prices to rise and yields to fall.

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