This morning’s data is likely to dampen expectations for a Federal Reserve rate hike as early as summer or early fall, as softer-than-expected employment figures point to cooling momentum in the U.S. labor market.
U.S. job creation missed forecasts in June, potentially delaying market bets on near-term Fed tightening. The Nonfarm Payrolls report showed just 57,000 jobs were added.
That was significantly below economists’ expectations of 110,000 and marked a sharp slowdown from May’s revised increase of 129,000, previously reported as 172,000.
The unemployment rate slipped to 4.2%, compared with expectations of 4.3% and May’s 4.3% reading. The decline came despite weaker hiring, driven by a drop in the labor force participation rate to 61.5% from 61.8%.
Bitcoin BTC $61,813.31, which was already strong heading into the release, held above $61,000 and gained about 4% over the past 24 hours.
Risk assets reacted positively overall, with Nasdaq 100 futures rising about 0.7% after being little changed before the report. The 10-year Treasury yield also moved lower, easing four basis points to 4.46%.
Interest rate expectations have been one of the key macro drivers this year. Earlier optimism around policy easing—supported by political pressure from President Trump for lower rates and speculation about leadership changes at the Fed—had shaped expectations for 2026 rate cuts.
However, rising energy prices pushed inflation higher in the first half of the year, prompting a more hawkish stance from new Fed Chair Kevin Warsh, who surprised markets with a tighter policy outlook at the most recent meeting.
Following the jobs data, rate expectations shifted quickly. CME FedWatch data showed the probability of one or more rate hikes by September fell from roughly 65% to 50% shortly after the release.
