The US economy added 172,000 jobs in May, roughly double what economists expected. And just like that, the conversation around Federal Reserve policy flipped from “when do they cut” to “when do they hike.”
The jobs report, released on June 5, blew past consensus forecasts of approximately 85,000 new nonfarm payrolls. The unemployment rate held steady at 4.3%, and prior months’ figures were revised upward.
Markets reprice everything
Traders moved fast. On the CME FedWatch tool, the probability of a quarter-point rate hike by December 2026 surged to roughly 68%, up from 52% before the report landed.
Two-year Treasury yields climbed by about 9 to 13 basis points, settling in the range of 4.13% to 4.17%.