Strong US jobs report sends bonds and stocks lower
US nonfarm payrolls surged 172,000 in May, nearly double expectations, pushing bond yields higher and dragging equities lower as rate-cut bets faded.
A much stronger-than-expected US jobs report sent bond prices tumbling and equities lower on Friday, as traders slashed bets on Federal Reserve rate cuts. Nonfarm payrolls rose 172,000 in May, nearly double the consensus estimate of 85,000, while prior months were revised up by a combined 93,000 jobs. The unemployment rate held steady at 4.3% and wage growth remained firm, reinforcing the view that the labor market remains resilient despite elevated interest rates.
The robust employment data reduces the urgency for the Federal Reserve to ease monetary policy, pushing bond yields higher and weighing on risk assets. The 10-year Treasury yield climbed sharply, while the S&P 500 and Nasdaq fell as rate-sensitive sectors sold off. For currency traders, the stronger jobs report supports the dollar, as it widens the interest rate differential between the US and other major economies. The dollar index rose against a basket of currencies, with the euro and yen both weakening. Traders can track the latest FX quotes on NowPrice for real-time updates on major pairs.
Looking ahead, market attention will turn to the Federal Reserve's next policy meeting and the updated dot plot. If the labor market continues to surprise to the upside, the first rate cut could be pushed further into 2026. Key data releases to watch include consumer price inflation for May and retail sales figures, which will provide further clues on the economy's trajectory. Traders should also monitor central bank commentary for any shifts in tone regarding the pace of policy normalization.