Strong June Jobs Data Dims Hopes for a July Fed Rate Cut

A surprisingly robust U.S. employment report for June appears to put to rest speculation that the Federal Reserve might lower interest rates this month.

The Bureau of Labor Statistics reported Thursday that nonfarm payrolls expanded by 147,000 in June, outpacing economists’ forecasts of 110,000. The figure also represents a slight increase from May’s revised total of 144,000, initially reported as 139,000.

The unemployment rate dropped to 4.1% in June, beating expectations of 4.3% and edging down from May’s 4.2%.

Bitcoin
BTC

$1,07,993.29
saw a modest pullback immediately following the jobs release, slipping to just below $109,000. The cryptocurrency had been steadily rising in the days leading up to the report, briefly topping $110,000 earlier—the highest level in roughly a month.

U.S. equity futures reacted positively to the labor market data, with the Nasdaq 100 and S&P 500 each gaining about 0.3%. Meanwhile, the yield on the 10-year Treasury note surged nine basis points to 4.36%.

Market watchers have been scrutinizing economic indicators for clues about the Fed’s next moves. Although a few central bank officials have floated the idea of a rate cut in July, Fed Chair Jerome Powell has maintained that the economy remains solid enough to justify a patient approach toward easing monetary policy.

This measured stance has put Powell at odds with President Trump, who continues to urge the Fed to implement significant rate reductions without delay.

Before Thursday’s employment figures were published, traders were assigning roughly 75% odds that the Fed would leave rates unchanged at its late-July policy meeting, according to CME FedWatch data. For the September meeting, traders had priced in a 95% probability of at least one 25-basis-point rate cut.

Fifteen minutes after the jobs report’s release, the market shifted notably: the odds of a July hold rose to 95%, while expectations for a September cut fell to 78%.

Further details from the report showed that average hourly earnings increased by 0.2% in June, coming in below forecasts of a 0.3% rise and lower than May’s 0.4% gain. Year over year, average hourly wages were up 3.7%, slightly softer than projections of 3.9% and May’s 3.8%.

The employment report was released a day ahead of schedule due to the July 4 holiday. Both the NYSE and Nasdaq planned to close early at 1 p.m. ET on Thursday, with bond markets shutting at 2 p.m. ET. All U.S. financial markets will remain closed on Friday.

Also released Thursday, weekly initial jobless claims declined to 233,000 from the previous week’s 237,000, beating forecasts of 240,000 and reinforcing signs of labor market resilience.