The US Department of Labor released the May 2025 non-farm employment data last night, showing that 139,000 jobs were added in May, slightly higher than the market expectation of 126,000, indicating that the labor market has not fallen into a recession as some feared.
However, compared to the 177,000 increase in the previous month (April), the May data showed a significant slowdown and reached the lowest record since February this year. The unemployment rate remained at 4.2%, in line with market expectations, but the labor force participation rate slightly decreased to 62.4%, showing a slight weakening in labor market participation.
Non-Farm Data Provides Space for Fed to Postpone Rate Cut
The non-farm employment report shows that the US labor market remains resilient but with a slowing growth trend. Particularly, average hourly wages grew 0.4% month-on-month and 3.9% year-on-year, both higher than market expectations, suggesting potential inflationary pressure. The New York Times analysts pointed out that this report strengthens the Federal Reserve's wait-and-see attitude towards further rate cuts.
The market generally expects that the Fed will again choose to maintain the federal benchmark interest rate unchanged at this month's FOMC meeting, to observe subsequent inflation data and global trade environment changes, such as the impact of tariff policies on the economy. Analysts believe that the Fed may need more evidence of significant economic slowdown or inflation stabilization before considering an insurance rate cut.
According to the CME FedWatch tool, after the non-farm employment report was released, the market estimated that the probability of the Fed not cutting rates in June has reached 99.9%; the market's expectation of the Fed maintaining rates in July has surged from 68.6% to 83.4%; until September, the market estimates a 54.6% probability of the Fed restarting rate cuts by 1 basis point, while the probability of maintaining rates in September is 35.9%.
US Stocks Rise, Bitcoin Rebounds to $105,000
According to Google Finance data, US stock markets rose across the board last night after opening:
- Dow Jones Industrial Average: Up 1.1%, or 463.57 points, at 42,774.22 points
- S&P 500 Index: Up 1.12%, or 65.77 points, at 6,005.07 points
- Nasdaq Index: Up 1.33%, or 255.76 points, at 19,553.99 points
- Philadelphia Semiconductor Index: Up 1.67%, or 83.62 points, at 5,094.21 points
In the cryptocurrency market, Bitcoin also steadily rose, climbing from around $101,000 to $105,000 last night, currently reporting at $104,955, recovering the previous day's decline and recording a 0.5% gain in the past 24 hours.
Trump Calls for Lowering Federal Benchmark Interest Rate
It is worth noting that US President Trump, after the latest non-farm employment report was released, also posted multiple messages on his social platform Truth Social, calling on the Fed to immediately lower the federal benchmark interest rate, stating:
Prices are falling, incomes are rising, our border is closed, gasoline prices are low, inflation has disappeared. Our country is thriving! Businesses are flooding into the US at an unprecedented rate!
The US is red hot! It was ice cold six months ago! The border is closed, prices are falling, wages are rising!
The Fed's "late action" is a disaster! Europe has cut rates 10 times, and we haven't cut once. Despite this, our country is performing excellently. Cut rates by a full percentage point and ignite rocket fuel!
If the Fed "acts too late" in cutting rates, we can significantly lower the short and long-term interest rates of maturing debt. Biden mainly chose short-term debt. Now there's almost no inflation, but if inflation rises, just raise the "interest rate" to address it. Very simple! His policies are costing our country dearly. Borrowing costs should be drastically reduced!
