Strong U.S. Payrolls But It's Not All Roses

US nonfarm payrolls rose by 172k in May, beating consensus forecasts, but the gain was driven by a narrow set of sectors and potentially temporary factors. Consequently, market pricing for aggressive Fed rate hikes appears premature.

Key Takeaways

• 1.US nonfarm payrolls grew by 172k in May, exceeding consensus expectations, though breadth by sector remains narrow.
• 2.Markets are likely overreacting to the employment report by pricing in aggressive Fed rate hikes.
• 3.Positive revisions to previous months and solid hours worked signal potential Q2 GDP strength.

Table of Contents

• Strong U.S. Payrolls — But It's Not All Roses
• MARKETS PREMATURELY PRICING HIKES?
• DETAILS—MOSTLY POSITIVE

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