Treasuries ran into some profit-taking after their huge gains, but fund futures still imply an 85% chance the Fed will cut rates in September and ease by 100 bps or more by this time next year

Share markets found some much needed support in Asia on Monday as the heightened prospect of lower borrowing costs helped soothe concerns about the U.S. economy, though the long-term credibility of U.S. policy remained in doubt.

A buy-the-dip mentality led to a bounce in Wall Street and European stock futures, and allowed the dollar to stabilise after Friday’s U.S. payrolls-induced retreat.

Treasuries ran into some profit-taking after their huge gains, but fund futures still imply an 85% chance the Federal Reserve will cut rates in September and ease by 100 basis points or more by this time next year.

The prospect of a shift in rates was the only silver lining to a dire payrolls report in which downward revisions left the three-month average of jobs growth at 35,000 from 231,000 at the start of the year.

The report brings payroll growth closer in line with big data indicators of job gains and the broader growth dataset, both of which have slowed significantly in recent months, said analysts at Goldman Sachs.

Taken together, the economic data confirm our view that the U.S. economy is growing at a below-potential pace, they said.

Neither did the reaction of President Donald Trump instil confidence, as the firing of the head of Labor Statistics threatened the credibility of U.S. economic data.

Likewise, news that Trump would get to fill a governorship position at the Federal Reserve early added to worries about the politicisation of interest rate policy.

Analysts assume the appointee will be loyal to Trump alone, though the president did grudgingly concede that Fed Chair Jerome Powell would probably see out his term.

It opens the prospect of broader support on the Fed Board for lower rates sooner rather than later, said Ray Attrill, head of FX research at NAB.

Fed credibility, and the veracity of the statistics on which they base their policy decisions, are both now under the spotlight, he said.