U.S. employment data has dashed hopes of a rate cut

Friday's jobs report finally dashed hopes for a key rate cut by the Fed in July, writes Business Insider. Although the most likely scenario was considered a reduction in September, July was also considered - the likelihood of this was increasing after a number of data indicating a slowdown in the labor market and lower inflation.

That option has now been ruled out, as the US created 272,000 new jobs in May, far exceeding forecasts. Wage growth also beat expectations, with average hourly earnings rising 0.4% last month.

“Today's data refutes signals that the US economy is cooling and closes the possibility of a rate cut in July”, said Principal Asset's chief global strategist Seema Shah. The probability of that is now estimated at just 9%, half what it was before the report was published. Some experts doubt that the Fed will undertake a cut in September as well.

The strong employment numbers also had an impact on the stock market, which reacted by falling on Friday. Treasury yields rose more than 10 basis points.