Jobs report

The May 2026 U.S. jobs report released yesterday showed stronger-than-expected labor market resilience. Nonfarm payroll employment rose by 172,000 in May. This beat consensus forecasts (around 85,000) and followed an upwardly revised April gain of 179,000. Unemployment rate held steady at 4.3%. You would think the market would like the news. But stocks sold off sharply on the stronger than expected data, as it diminished hopes for imminent Fed easing and pushed bond yields higher. Even Bond yields rose (Treasuries sold off) due to reduced rate-cut expectations. it appears the market is confused at this point, or simply nervous: fed fund futures discount a hike with 85% probability for this year, so this should not be a surprise. And yields should go down if the Fed does not cut because that would indicate they’re trying to keep inflation under control. Bit that’s not what happened. Both bonds and equities sold off. In 2 weeks we’ll know what Mr Warsh has in the bag for us. But the market is getting anxious between the impact on the economy from the Iran conflict and the monetary front.

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