Fed Policy Outlook Firm After Jobs Beat Expectations
Nonfarm payrolls rose by 139,000 in May, beating the Dow Jones forecast of 125,000. The unemployment rate held steady at 4.2%, and treasury yields pushed higher in response—10-year yields rose to 4.434%, while 2-year and 30-year yields added about 4 and 3 basis points respectively. The jobs data offered the Fed room to maintain its current policy stance, with Fed funds futures now pricing in a 97% chance that rates remain unchanged at the June meeting.
Goldman Sachs’ Lindsay Rosner noted that the Fed remains focused on inflation risks and the jobs report does little to shift their patient stance. Still, political pressure looms—President Trump again called for a full-point rate cut despite the strong data, arguing it would lower borrowing costs on national debt and boost economic performance.
Dollar’s Weekly Loss Reflects Broader Economic Concerns
Despite Friday’s uptick, the dollar is on pace for a 0.5% weekly loss. A string of weak economic indicators earlier in the week—blamed in part on the lingering effects of trade tariffs—cast doubt on the broader growth outlook. Limited progress on trade talks has also weighed on sentiment, with traders scaling back aggressive positioning ahead of key events.
