US Treasury Yields Rise After Strong May Jobs Report

The U.S. dollar strengthened following a stronger-than-expected May jobs report, which showed nonfarm payrolls rising by 139,000 and an unemployment rate steady at 4.2%. This robust labor market data eased concerns of a significant slowdown and supported expectations that the Federal Reserve will hold interest rates steady in the near term, despite some internal debate among Fed officials about potential rate cuts later in the year. Treasury yields surged, with the 10-year yield climbing above 4.48% and the 2-year nearing 4.04%, reflecting investor anticipation of a tighter monetary policy amid inflation worries and economic resilience. Meanwhile, President Trump publicly pressured Fed Chair Powell for more aggressive rate cuts, though market pricing suggests only modest easing is expected by year-end. In Europe, the ECB cut interest rates by 25 basis points and lowered inflation forecasts while signaling a possible pause in easing, with Italy’s 10-year bond yields rising slightly as investors digested the U.S. data and ECB policy stance. Overall, the U.S. jobs data and Fed comments are reinforcing a cautious but steady approach to monetary policy amid ongoing trade tensions and inflation uncertainties.