U.S. Change in Nonfarm Payrolls for May were 272k, solidly beating the 180k estimate. But April’s payrolls were revised lower, going from 175k to 165k. And the Unemployment Rate increased to 4.0% from 3.9% estimate and prior, the highest reading since January 2022.
The surprise payrolls increase dominated the data, leading to a sharply stronger dollar and higher treasury yields. The dollar is trading at weekly highs vs. most G10 currencies including +0.97% vs. NZD, +0.95% vs. SEK, +0.86% ns. NOK, +0.84% vs. AUD, +0.68% vs. CHF, +0.66% vs. JPY, +0.53% vs. EUR, +0.45% vs. GBP, & +0.36% vs. CAD. The U.S. Dollar Index is +0.58% at 104.70.
Dollar losses are vs. emerging markets on modest interest returning to carry trades: -0.63% vs. ZAR & -0.60% vs. MXN.
U.S. Treasury yields are higher in all tenors, led by the mid yield curve: 4yr-10yr all up 0.14%. The 10-year yield is trading at 4.421% following three days of lows near 4.27%. The probability of a December rate cut dropped from 78% at yesterday’s close to 68% currently in the wake of today’s strong labor report.
Gold is -2.81% today at $2,308.25oz, a 1-month low. Silver is -5.88%.
Next week’s economic calendar includes the FOMC’s rate decision on Wednesday, sandwiched between May CPI (released on Wednesday before the Fed rate announcement) and Thursday’s PPI on Thursday.
