Insights 
VT 
The US employment trends index for August stood at 106.41, down from 107.55 in the prior period. This data is provided by The Conference Board.
Employment Trends Index Overview
Employment trends have gained attention due to fluctuations in non-farm payroll data. The index serves as a composite measure, incorporating data that has already been released.
Though considered a low-tier indicator, it holds relevance in the current employment landscape. The decrease in the index may suggest evolving employment conditions.
The August Employment Trends Index fell to 106.41, a noticeable drop from the prior month’s 107.55. This composite indicator points towards a cooling labor market ahead. We are taking this seriously as it reinforces the narrative that future job growth is set to weaken.
This softening signal comes after a volatile period for jobs data. After we saw Non-Farm Payrolls beat expectations in July 2025 with a 240,000 print, the most recent report for August came in below consensus at only 160,000 jobs added. The continued slowdown in the ETI suggests the weaker August number is more indicative of the underlying trend.
Federal Reserve Impact
We have seen this type of divergence before. Looking back at the 2007-2008 period, the Employment Trends Index began its decline several months before the headline payroll numbers officially signaled a recession. This historical pattern suggests we should be positioning for slower economic activity now, rather than waiting for confirmation from lagging data.
For traders, this increases the probability that the Federal Reserve will pivot towards a more dovish stance. The Fed has held rates steady at 5.50% for most of 2025, but futures markets are now pricing in a 60% chance of a rate cut in the first quarter of 2026. We should consider positioning in options that benefit from falling interest rates, such as long calls on 10-year Treasury note futures (ZN).
A more accommodative Fed is typically a tailwind for equities, especially for growth sectors. We should look at call options on the Nasdaq 100 index (NDX) as a way to play potential upside from lower borrowing costs. At the same time, if the market anticipates a “soft landing” engineered by the Fed, implied volatility could fall, making selling VIX futures an attractive strategy.
This outlook also has significant implications for the U.S. dollar. As expectations for rate cuts grow, the dollar’s yield advantage over other currencies will likely narrow. We believe buying put options on the U.S. Dollar Index (DXY) is a prudent way to position for this potential weakness.
