Jobs report raises doubts about Fed rate cuts, Treasury yields jump: FT

The latest jobs report complicates Fed rate cut expectations. With 130,000 jobs added and unemployment at 4.3%, the odds for a rate cut at the June 2025 FOMC meeting are uncertain. Treasury yields jumped 48 basis points to 4.41%.

Traders are adjusting. The Fed Rate Decisions market is active, especially the June 18 sub-market. Rising Treasury yields and a strong labor market suggest rate cuts might be unlikely soon. The new employment figures are enough to dampen enthusiasm for a June cut.

With oil prices over $100 a barrel and Middle East tensions, the Fed faces challenges. Traders are considering the impact on inflation and growth, complicating any decision to ease monetary policy.

Trading volume for this market is $0, indicating a pause or hesitation amid uncertainty. The lack of significant trades suggests a wait-and-see approach as market participants process the data. Order book depth will be crucial in determining sentiment shifts once trading resumes.

For traders, betting on a rate cut by June seems optimistic. With YES shares likely priced low, a successful bet requires a significant shift in economic indicators or a dovish signal from Powell. A share priced at 22¢ pays $1 if the rate cut occurs, but substantial economic cooling is needed for that outcome.

Watch upcoming Fed speeches and economic data releases. Powell’s next testimony or any change in FOMC minutes could be pivotal. Look for commentary from Wall Street economists and shifts in the Treasury yield curve as potential signals.

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