U.S. Added 272K Jobs in May, Blowing Past Estimates; Unemployment Rate Rises to 4.0%

As a crypto investor with some experience under my belt, I’ve seen my fair share of market swings driven by economic data releases. Today’s strong U.S. jobs report has put a significant damper on my expectations for imminent Fed rate cuts, and the markets seem to agree.

The U.S. job market showed robustness in May, as per the government’s report, with a surprising increase of 272,000 new jobs created – significantly surpassing the forecasted figure of 185,000 and outpacing the April growth of 165,000 (previously reported as 175,000).

The May unemployment rate was 4.0% versus estimates for 3.9% and April’s 3.9%.

As a crypto investor, I’ve just reviewed this morning’s wage report and was pleasantly surprised to find that the average hourly earnings grew by 0.4% in May instead of the anticipated 0.3% increase. Moreover, this figure represents a significant improvement compared to the 0.2% rise in April.

During the first few months of 2024, interest rates experienced an upward trajectory. However, over the past five weeks, there has been a noticeable decrease in interest rates. This trend can be attributed to recent U.S. economic data suggesting a potential deceleration in both economic expansion and inflation. The yield on the 10-year Treasury note stood at 4.30% before today’s release, compared to its peak of 4.71% in late April.

As an analyst, I’ve observed that the recent decrease in rates has brought significant gains for risk assets. Consequently, the major U.S. stock market averages have soared to new heights, touching record-breaking levels. Additionally, the price of bitcoin has rebounded from approximately $60,000 to near its all-time high, which hovered around $73,500.

As a researcher studying global economic trends, I’ve been observing signs that major Western economies are preparing for a monetary easing cycle. This week, two key players in this scenario – the Bank of Canada and the European Central Bank – made moves in this direction by cutting their benchmark interest rates for the first time in several years. Regarding the U.S., there’s been a significant increase in expectations for a Federal Reserve (Fed) rate cut. Prior to today’s announcement, investors had calculated approximately a 55% chance of a rate reduction during or before the Fed’s September policy meeting.

As a crypto investor, I’ve seen some impressive gains today, but I have a feeling that this bullish trend might take a turn for the worse in the short term. Bitcoin’s sudden drop is a clear sign of this shift, and it’s not just limited to the cryptocurrency market. The 10-year Treasury yield has jumped up by 12 basis points to 4.42%, indicating a stronger US dollar and potentially higher borrowing costs. US stock index futures are also hinting at a downward opening. Other indicators include a surging US dollar, up 0.5%, and gold taking a tumble of more than 2%.