May Jobs Report: May the Labor Force Be With You

Bank of America expects a strong May jobs report (95k NFP) to keep upward pressure on US Treasury yields and the USD, as the market increasingly prices in Fed hike risks.

Key Takeaways

• 1.BofA forecasts a May NFP of 95k, which is above the market consensus of 85k, while maintaining an unemployment rate forecast of 4.3%.
• 2.The US rates market is expected to show greater sensitivity to an NFP beat compared to a miss, as a strong report could shift the Fed's stance toward potential hikes.
• 3.The US Dollar (USD) remains rangebound due to geopolitical factors but faces upside risks if relative US data trends, particularly labor, surprise to the top side.

Table of Contents

• Key takeaways
• Economics: another strong month in the labor market
• Fed: hikes unlikely to materialize until u-rate close to 4.0%
• US rates: risk of higher US rates
• FX: Can US jobs trump geopolitics?
• Recent history suggests no DXY range break yet...
• ...But asymmetries are likely to the upside
• Appendix
• Notable Rates and FX Research
• Rates, FX & EM trades for 2026

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