The US economy added 172,000 jobs in May, roughly double what economists expected. The reward for all that hiring? A violent sell-off in Treasuries and a rapid repricing of what the Federal Reserve does next.
Traders are now fully pricing in a 25 basis point rate hike before the end of 2026. Not a cut. A hike.
The numbers that broke the narrative
Economists had penciled in roughly 85,000 new nonfarm payrolls for May. The actual figure came in at 172,000, more than double the consensus estimate. The unemployment rate held steady at 4.3%, offering no relief to anyone hoping the labor market was cooling.
The bond market’s reaction was immediate and unforgiving. The 2-year Treasury yield, the maturity most sensitive to Fed policy expectations, jumped as much as 13 basis points to 4.17%. The 10-year yield climbed above 4.53%.
