The market mover that traders and investors had been waiting for, the Non Farm Payrolls report, the thermometer of US labor-market conditions, has finally landed.

And for anyone trying to anticipate what will happen to US interest rates at the end of the Federal Reserve’s next meeting, the first to be chaired by new President Kevin Warsh, the signals are no comfort to the doves.

You could see it in the market reaction, above all in the Treasury market, where 10-year yields jumped 5 basis points immediately after the US employment report was released, to 4.534%, the highest since May 21.

The move in 2-year Treasury yields was even sharper: up 7 basis points to 4.115%, the highest since May 20.

The reason: the NFP (Non Farm Payrolls) showed that the US labor market is more than solid.

Nonfarm payrolls surge by 172,000 in May, a blow to Fed rate-cut hopes

In May, US payrolls, the so-called Non Farm Payrolls (NFP), actually rose by a hefty 172,000, more than double the consensus estimate of an 85,000 increase.

There was more: the Bureau of Labor Statistics said it had revised April’s figure higher, reporting that payroll growth that month came in at +179,000, up from the 115,000 increase originally announced.

March’s NFP gain was also revised up, to 214,000, better than the previously reported +185,000.

In effect, the net upward revision to payrolls over the past two months was a sizable 93,000.

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

Cutting US rates, then, especially at a time when inflation is running hot, is not at all necessary.

Rather than cutting, in fact, and precisely because of the rise in prices, there is now talk of the need for the Fed to do the opposite, that is, to deliver a restrictive move.

The release of the NFP was indeed immediately followed by an increase in bets on a US rate hike, specifically at this year’s December meeting.

The odds of monetary tightening at the year’s final FOMC meeting on December 8-9, 2026 rose significantly, from 45% to 61%.

At the upcoming June 16-17 meeting, by contrast, where the Fed will announce its monetary policy decisions for the first time under Warsh’s chairmanship, markets and analysts expect rates to be left unchanged again, in the 3.5% to 3.75% range.

US labor market: it’s not just payrolls. Unemployment rate steady in May

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

This, in short, is not a labor market crying out to be rescued. Quite the opposite.

That was confirmed by some economists who commented on the fresh numbers, highlighting the return of hiring.

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

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

The prospect of a Fed in Kevin Warsh’s hands ready to cut rates, as Trump has hoped, is fading further and further. Trump picked the banker hoping to see his wish for a more expansionary monetary policy granted.

It is unlikely, in fact, that Warsh will satisfy the US president’s wish, a wish that went continually unmet in the Powell era, which is now drawing to a close.

Returning 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, was the source of the headache plaguing the Fed, as well as American citizens, namely inflation.

Wages rose 3.4% on an annual basis, in line with expectations, but still at a meaningful pace, a factor that urges the US central bank not to let its guard down against inflationary pressures.

As for the sectors of the US labor market, private payrolls rose by 120,000 overall, more than the expected 85,000 gain, while in manufacturing the increase was 7,000, above the estimated 2,000.

Also notable was the growth in new jobs in US government, at 52,000, recovering from the 8,000-job 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 «Tassi Fed, mercato lavoro USA stronca speranze tagli. Warsh costretto ad alzarli, la data secondo i mercati». It has been translated and adapted for an international audience by the Money.it International desk.