NFP: Nonfarm Payrolls Come In Hot at 272,000 in May, Way Above Consensus Views

And it’s back to square 1 with the Federal Reserve’s rate-cut timeline. Hot economy might delay expected reduction to borrowing costs.

• US nonfarm payrolls USNFP smashed analysts’ estimates for 180,000 to 185,000 new jobs in May and came in hot at 272,000. The more-than-expected job gains complicated the Federal Reserve’s rate-cut trajectory, potentially pushing back the first interest rate cut deeper into the year. The number also flew way above April’s 175,000 —a figure that sparked excitement over a cooling economy.
• What does this big number mean? Investors had hoped to see another cool jobs report and string it together to the one in April. That way, the Fed would’ve had two consecutive months of soft job growth to work with. Such softening in the workforce should bring markets closer to the start of the interest-rate cut campaign. Now, however, this question is back on the table: is the progress reversed and are we getting rate cuts this year at all? Fed boss Jay Powell will provide much needed guidance next week when the Fed decides its interest rate.
• Against this backdrop, the prospects of elevated interest rates boosted the US dollar across the board. The greenback knocked the euro and erased all its advances made this week. The USD/JPY is looking to cross 157.00 after briefly dipping below 155.00. Gold took a dive, moving from $2,350 before the news to $2,315 per ounce after the report. Stock futures wiped out their pre-market gains as markets were shook by the monster upside surprise in new jobs gained.