The Non-Farm Report shows that the Federal Reserve can be pa...

The Non-Farm Report shows that the Federal Reserve can be patient in fighting inflation. The job market did not suddenly weaken, leaving the Federal Reserve in a difficult situation where it must not only consider solving the problems affected by the labor market, but also pay attention to excessive inflation.

US Treasury yields and the dollar soared, driven by a sharp increase in non-farm payrolls. The US labor market remains strong, which will delay expectations of interest rate cuts.

US Treasury yields rose after another hot employment report came out. The 2-year Treasury yield jumped 5 basis points to 4.70%. The 10-year treasury bond rose 7 basis points to 4.38%. Interest rate cuts are expected to fall in June. The current forecast is to cut interest rates by 14 basis points, compared to 16 basis points previously. The OIS swap shows that interest rate cuts are expected to drop to 68 basis points this year.

Current bets on the Fed's interest rate cut show that the interest rate cut expectations for September (not July) are fully priced. So, the initial conclusion from the swap market is that the Federal Reserve has more time to put aside interest rate cuts.