Over the previous days, US bonds have renewed their decline, sending their respective yields toward the cycle highs as market players expect more and more monetary policy tightening over the following months.
Friday’s jobs data
According to data released on Friday, the US added 390,000 jobs in May, down from the previous month’s upwardly revised 436,000 and the lowest since April 2021, but far over the forecasted 320,000.
The jobless rate remained at 3.6%, missing forecasts for a reduction to 3.5%, the lowest since the financial crisis. However, the percentage of people who participated in the labor market grew from 62.2% to 62.3%, which was in line with expectations.
Average hourly pay increased 5.2% on an annual basis, which was in line with estimates and down from 5.5% last month. On the other hand, the monthly salary rise stayed at 0.3%, much below the predicted 0.4%.
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Soaring inflation weighs on consumers
The Bureau of Labor Statistics (BLS) will release the most recent Consumer Price Index (CPI) data on Friday, tracking price rises in May. The latest estimate might reveal whether inflation has peaked or will continue to rise. In April, consumer inflation in the United States dropped somewhat after reaching a 41-year high of 8.5% in March. In May, expectations are for 8.2%, which is still more than four times greater than the Federal Reserve’s objective of 2%.
Finally, the University of Michigan will announce the preliminary Consumer Sentiment Index figure for June. In May, consumer confidence dropped to 58.4 in May, the lowest since August 2011, down from 59.1 in April. Concerns over increasing inflation, as well as pessimism about the property market’s declining affordability, sank confidence to its lowest level in nearly a decade. According to predictions, the preliminary June figure will dip even lower to 56.9.
This week, the Federal Reserve enters a blackout period, limiting how much staff and members of the Federal Open Market Committee (FOMC) may speak publicly or talk to the media ahead of their next policy-setting meeting on June 14-15.
It appears that we will see several 50 basis points rate hikes this year as inflation remains exceptionally high, damaging consumer confidence and spending.
“Right now, it’s very hard to see the case for a pause,” Vice-Chair Lael Brainard told CNBC in an interview Thursday. “We’ve still got a lot of work to do to get inflation down to our 2% target.”