Shōkunin Capital & Strategy Weekly – August 10, 2026

The July employment report, released Friday, showed the economy lost 23,000 jobs, the first monthly decline in years and a wide miss against the 83,000 gain that had been forecast. The number underneath was weaker still. May and June were revised down by a combined 103,000, erasing much of the spring’s apparent strength, and the twelve-month pace of hiring now sits far below where it looked a month ago.

The unemployment rate fell to 4.1 percent, but not for a good reason. It dropped because people left the workforce, with labor force participation falling to its lowest in more than five years. Wage growth cooled to 3.2 percent over the year, the slowest in nearly five years. This is a labor market losing momentum, not one running hot.

That reframed the rate debate in a single morning. Three Fed officials had dissented in favor of a hike just over a week earlier, and the odds of a September increase had been above 57 percent. After Friday, those odds fell toward 40 percent, the ten-year Treasury eased to about 4.65 percent, and stocks rallied hard on the week. The hawkish case did not vanish, since inflation is still the Fed’s stated worry, but it got harder to make.

What makes this jobs number carry more weight than it used to is that the Fed has stopped offering forward guidance. Under Chair Warsh there is no dot plot signal and no if-this-then-that, only a short statement about what was just decided, while individual members say on the record they would raise rates. That leaves everyone, and especially a borrower without a research desk, reading tea leaves: this jobs print, then Tuesday’s inflation report, with no stated rule connecting the data to the decision. The practical effect is that certainty is scarcer and worth paying for. Prime is holding at 6.75 percent, and where a rate can be locked, locking it removes a variable no one is willing to explain.

The bond market took the jobs report as relief. Yields eased on the week, with the ten-year back near 4.65 percent, a welcome move after the thirty-year had touched an eighteen-year high days earlier. That is the number that prices commercial real estate. On the agency side, ten-year fixed multifamily money is quoting roughly 5.4 to 6.1 percent depending on leverage and structure, and the lending volume that had pulled back as long rates climbed gets a little room if the relief holds. The condition is Tuesday’s inflation report, which lenders will want to see before they price it in.

Most of July’s decline came from government, and within it local public education, which shed 50,000 positions after little net change over the prior year. Some of that is likely a quirk of seasonal adjustment that could reverse next month, so read it with caution. Underneath, though, is a real trend. School districts are in their largest wave of layoffs in more than a decade, with seven of the ten largest districts cutting staff, from Los Angeles Unified to Clark County, Chicago, and Cleveland. The main driver is the expiration of the federal pandemic relief money that had inflated school hiring, compounded by declining enrollment and, at the federal level, cuts and reorganization at the Department of Education. For anyone whose tenants or local economy lean on a school district, this is a slow structural drag, not a one-month blip.

A second labor story is playing out in the fields. Immigrant workers make up about 68 percent of the farm labor force, and tighter immigration enforcement under the current administration has measurably thinned it, with growers in California, Florida, and New York reporting workers who stopped showing up and crops left unharvested. The Labor Department has acknowledged the strain. Research from Michigan State puts a number on it: a 10 percent drop in farm employment translates to roughly a 3 percent rise in food prices. California, which grows about a third of the nation’s vegetables and three quarters of its fruits and nuts, sits at the center of it, and the cost feeds the same pressure as diesel and freight into any business with food or labor in its supply chain.

Closer to home, the rate relief helps at the margin. Los Angeles multifamily, which leans heavily on agency financing, gets a little breathing room if long yields hold, though vacancy near 4.2 percent and the Measure ULA transfer tax still tighten what a deal clears. Industrial has softened to roughly 4.9 percent vacancy on the tariff slowdown. The steadier source of value remains entitlement. Senate Bill 79, the transit-density law in effect since July, is working through individual cities, and in a market where the cost of capital is doing none of the work, more of the return has to be created in what a site is approved to build.

Hotels are still having a better year than expected, with CoStar’s 2026 revenue-per-room forecast raised to 2.8 percent and gains reaching every tier. But the July jobs report carried a caution. Restaurants and bars cut staff, and leisure and hospitality lost 40,000 positions, a sign the World Cup provided less lift than the industry had hoped. Last week’s pullback in oil helps the value traveler, who feels fuel costs first, though that relief rests on the same fragile Iran talks moving the energy market. The setup is sound, and the labor and fuel lines are the ones to watch into the fall.

Two things to track. First, the Senate passed the Graham sanctions bill on Friday, which would let the President impose tariffs of up to 100 percent on the largest buyers of Russian oil and gas, a group that includes China and India. It is not law yet. The House does not return until September, and its path there is uncertain. If it passes and is used, it is another potential input-cost shock on goods from major trading partners, worth watching even though it is not a cost today. Second, Prime holds at 6.75 percent, so variable SBA pricing is steady, and the August SBA 504 pegs moved up to 6.272 percent on the 25-year. Manufacturers continue to price about a quarter point lower, near 6.03 percent, before the fee waivers many of them qualify for, a real advantage for an owner-user buying a building or equipment.

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Rate levels reflect the August 7, 2026 close; economic, labor, energy, and legislative figures as of the week ending August 8. Provided for general information and not investment, legal, or tax advice.