Net Impact Of Mixed Labour Market Report Sees FOMC Pricing Firm, Recent Extremes Untouched

Plenty of gyrations in broader markets on the back of the digestions of the latest labour market report.

• Highlights of the release included a notably firmer than expected headline NFP print (accompanied with positive revisions to recent months), as well as a larger than expected uptick in unemployment (driven by a meaningful fall in the number employed on the household survey side of the equation, which the unemployment rate is based on) and slightly softer than expected AHE data (including a negative revision to the prior M/M reading).
• The net impact has seen an uptick in FOMC hike pricing covering the next two meetings, to ~9bp for June and a cumulative 21bp through July vs. ~7bp and 17bp, respectively, pre-data (remaining off of the recent hawkish extremes). Further out, ~33bp of cuts are now priced through year-end vs. ~39bp pre-data.
• Pricing has moved away from post-data hawkish extremes.
• With nothing in the way of Fedspeak scheduled ahead of the impending pre-meeting blackout period expect plenty of hike/skip debate from market participants re: the June FOMC, particularly on the back of the mixed labour market report.