This morning’s data is likely to ease expectations for a Federal Reserve rate hike as early as summer or early fall, as weaker-than-expected employment numbers point to a cooling U.S. labor market.

U.S. job growth fell short of forecasts in June, potentially pushing back market expectations for near-term Fed tightening. The Nonfarm Payrolls report showed the economy added just 57,000 jobs.

That was well below economists’ estimate of 110,000 and a sharp slowdown from May’s revised gain of 129,000, which had originally been reported as 172,000.

The unemployment rate edged down to 4.2%, compared with expectations of 4.3% and May’s 4.3% reading. The decline came despite weaker hiring, driven by a drop in the labor force participation rate to 61.5% from 61.8%.

Bitcoin BTC $61,813.31 held firm ahead of the release, staying above $61,000 and rising about 4% over the past 24 hours.

Risk sentiment was broadly positive following the data, with Nasdaq 100 futures up around 0.7% after trading near flat beforehand. The 10-year Treasury yield also slipped four basis points to 4.46%.

Rate expectations have been a central macro theme this year. Earlier optimism around policy easing—supported by political pressure from President Trump for lower rates and speculation over Federal Reserve leadership changes—had shaped expectations for 2026 cuts.

However, rising energy costs pushed inflation higher in the first half of the year, prompting a more hawkish stance from new Fed Chair Kevin Warsh, who surprised markets with a tighter policy outlook at the most recent Fed meeting.

After the jobs report, market pricing shifted quickly. CME FedWatch data showed the probability of one or more rate hikes by September dropped from about 65% to 50% shortly after the release.