57K June Jobs Miss Slows Rate-Hike Urgency

The U.S. added 57,000 jobs in June, the Labor Department reported Friday. That was down from 129,000 in May and below consensus estimates. The deceleration is the steepest month-over-month slowdown since early 2022.

For the bond market, the miss shifts the near-term policy outlook. The two-year yield, which tracks Fed rate expectations, fell on the release. The ten-year yield also moved lower. The yield curve flattened as front-end rates declined more sharply.

Lower yields pulled the dollar down with them. The dollar index slipped against the euro and yen. A weaker dollar typically supports commodities priced in the currency. Gold edged higher after the print, though it gave back some of the gains later in the session.

Equities opened higher, led by growth stocks and rate-sensitive sectors. Real estate and consumer discretionary shares gained. The S&P 500 rose as traders priced in a lower probability of a July hike. Crypto markets also saw a brief lift. Bitcoin and ether ticked up alongside equities.

The slowdown follows a stretch of solid hiring that had kept the Fed on a tightening path. The question for the rest of July is whether the June number marks the start of a genuine easing in labor market tightness or is a one-month blip. The July payrolls report will be the next major test. The Fed's next rate decision comes at the end of the month. Between now and then, inflation data and retail sales will also shape expectations.

The jobs data alone does not close the door on another rate hike this year. It shifts the odds toward a hold in July. The July payrolls report is due in early August.