The US labor market is on a hot streak.
A strong May jobs report boosted market expectations that the Federal Reserve will have to raise interest rates this fall — putting President Donald Trump in a tough spot heading into the midterm elections.
US employers added 172,000 jobs last month and the unemployment rate held steady, raising concerns that the economy risks a new inflation surge. The report marks the third-consecutive month of six-figure job gains, a stark contrast to last year’s sluggish growth and a sign that the Iran war, higher oil prices, and the potential of AI isn’t changing employers’ approach to staffing.
Market-implied odds that the Fed would lower interest rates by its October meeting evaporated, and traders are now putting nearly 50-50 odds on at least one hike by then, according to CME data.
That would be unwelcome news for Trump and Republicans trying to keep control of Congress. Trump has aggressively pushed for the Fed to cut interest rates and his new pick for Fed chair, Kevin Warsh, campaigned for the job by laying out a path to do so.
“If Chair Warsh pushes for cuts at his first meeting, he will be pushing against the evidence,” an analyst told CNBC.
