The market mover that traders and investors had been waiting for — the Nonfarm Payrolls (NFP) report, the standard gauge of US labor-market conditions — has finally landed.

And for anyone wondering what the Fed will do with US rates at the end of its next meeting, the first chaired by newly installed Chair Kevin Warsh, the signals are no comfort to the doves.

You can see it in the market reaction, above all in Treasuries. After the jobs report was released, the 10-year yield immediately jumped 5 basis points to 4.534%, its highest since May 21. The move was even sharper at the short end: the 2-year Treasury yield spiked 7 basis points to 4.115%, the highest since May 20.

The reason: the NFP data showed that the US labor market is more than solid.

Payrolls surge by 172,000 in May, a blow to hopes for Fed rate cuts

In May, US payrolls — the Nonfarm Payrolls — actually rose by a hefty 172,000, more than double the consensus estimate of an 85,000 gain.

There was more. The Bureau of Labor Statistics revised April higher, reporting payroll growth of +179,000 for the month versus the 115,000 increase initially announced. March was also marked up, to +214,000 from the +185,000 previously reported.

In practice, the net upward revision to payrolls over the prior two months was a substantial 93,000.

All these numbers send a clear message — both to Kevin Warsh, who is set to take reporters’ questions on June 17 after the Fed’s rate announcement for the first time as Chair, and to America’s dove-in-chief, US President Donald Trump: the US labor market is more than fine.

Cutting US rates, therefore — especially with inflation running hot — is hardly necessary. If anything, given the climb in prices, there is now talk of the Fed doing the opposite: tightening.

The release of the NFP data was indeed followed immediately by a jump in bets on a US rate hike, specifically at the December meeting this year. The probability of monetary tightening at the FOMC’s final meeting of the year, on December 8–9, 2026, rose significantly, from 45% to 61%.

At the next meeting, on June 16–17 — when the Fed will announce its monetary-policy decisions for the first time under Warsh’s chairmanship — rates will, according to markets and analysts, again be left on hold, in the 3.5% to 3.75% range.

US labor market: not just payrolls — unemployment steady at 4.3%

Today’s report also showed that the unemployment rate held unchanged in May at 4.3%.

This is not a labor market crying out to be rescued. Far from it. Several economists confirmed as much, pointing to a return of hiring.

«The hiring recession is over. American companies are hiring again», Heather Long, chief economist at Navy Federal Credit Union, told CNBC. «This is a strong jobs report across the board».

All of this is happening while US inflation keeps accelerating, having jumped 3.8%.

The prospect of a Warsh-led Fed ready to cut rates — as Trump has urged, having chosen the banker in the hope of finally getting the looser monetary policy he wants — is fading further. It is unlikely Warsh will grant the President’s wish, which went repeatedly unfulfilled during the now-concluded Powell era.

Back to today’s report: the strength of the US labor market was also confirmed by the labor-force participation rate, at 61.8%.

What was also confirmed, however, is the source of the headache plaguing the Fed — and American households too — namely inflation. Wages rose 3.4% year on year, in line with expectations but still at a meaningful pace, a factor that warns the US central bank not to drop its guard against price pressures.

By sector, private payrolls overall rose by 120,000, above the expected 85,000 gain, while manufacturing added 7,000, beating the estimated 2,000. Also notable was job growth in US government, up 52,000, a rebound from the 8,000 decline in April.

Editor’s note

This article was originally published in Italian on money.it by Laura Naka Antonelli on June 05, 2026 as «Non Farm Payrolls, la grande sorpresa dal mercato del lavoro USA. La Fed di Warsh costretta ad alzare i tassi? La data». It has been translated and adapted for an international audience by the Money.it International desk.