📊 The market has rapidly repriced: rate-cut hopes are shattered, rate-hike expectations surge

Once the data was released, the market immediately repriced the “hawkish” outlook:

· Rate-cut expectations dashed: the market’s expectation for rate cuts within the year has cooled significantly. In the interest-rate futures market, the probability of a December rate hike by the Federal Reserve jumped from 48% before the data release to 63%. One analyst even said this data “completely overturns any reason for the Federal Reserve to cut rates in the coming months.”
· Panic reaction in the market: Nasdaq 100 index futures once plunged 1.33%, and the “reverse Goldilocks” market logic of the “bad-news-is-bad-news” “anti-Goldilocks Girl” market mindset once again took the upper hand. The 10-year U.S. Treasury yield shot up by more than 4 basis points to 4.52%, while the U.S. dollar index briefly jumped by 15 points to 99.36. The pound and the euro fell under pressure as the dollar strengthened; gold also dropped nearly $20 in the short term to $4,447.73 per ounce.

🔬 In-depth data interpretation: labor market resilience beyond expectations, structural risks still remain

The resilience and complexity of the labor market have both exceeded expectations. The key details are as follows:

· Employment growth exceeds expectations and broadens: 172,000 new jobs were added, far above the market expectation of 85,000; the prior figure was also revised substantially upward from 115,000 to 179,000. Employment growth has spread from healthcare to leisure hotels, local governments, and other areas. Endogenous momentum has strengthened, breaking the recession expectations that had previously been in place.
· Wages and unemployment rates stay stable: the unemployment rate remains steady at 4.3%, while average hourly earnings rise 3.4% year over year and 0.3% month over month. Stable wage growth will further support core services inflation, and sticky risks cannot be ignored.
· PMI signals are highly alert: both ISM manufacturing and services PMIs rise, but the price-paid index remains at a high level, while the manufacturing employment index is still below the 50 threshold that separates expansion from contraction.

🗣️ New Chair Waller: how will he interpret this “exam” paper of “testing”?

He is the core variable that influences judgment, and his unique philosophy—along with having the “right to interpret” when he first faces the data—is crucial. His interpretation is likely to revolve around a “rate-cut front-loading” strategy, along with playing down short-term fluctuations in the data and focusing on trends. As for inflation, he may introduce a more moderate “trimmed mean PCE” measure, changing the narrative about inflation pressure. In addition, he strongly believes that AI can bring substantial productivity gains to fight inflation. As Waller’s first non-farm payroll report during his tenure, the direction of subsequent policy communication is especially critical.

🎭 Market trust crisis: can “explanations” calm doubts?

However, whether the market will go along is facing huge trust challenges—amid contradictory information, there is a great deal of uncertainty.

· Contradictory core policy path and huge unknowns: Waller’s own policy stance of “rate cuts + balance sheet reduction” is inherently contradictory. And whether the AI anti-inflation narrative can be supported by non-farm data is highly uncertain, with huge unknowns.
· Hawkish history and interpersonal relationships: in the past, he has been a well-known “hawk.” Although he later changed his position after the nomination to support rate cuts, this sudden about-face will inevitably prompt the market to question the Federal Reserve’s independence. It is worth noting that the newly appointed Fed Chair Waller’s first appearance on the 17th of this month is his first formal “test” since taking office on May 22, succeeding Powell whose term has expired. Among the current Fed governors, only Jerome Powell may leave before the end of his term in 2028; other candidates may continue to stay in office.

⏳ What happens next?

· Key time window: June 17 is crucial. On that date, Waller will chair an FOMC meeting for the first time as Chair and hold a press conference. How he interprets this data will determine the market’s future pricing anchor.
· Core suspense: with resilient employment and stubborn inflation pressing in from both sides, the market’s central question is this—will investors trust and follow Waller’s policy framework, or will they view his “dovish” remarks as a compromise to political pressure, thereby further intensifying concerns about future policy uncertainty?
#非农