Analysis: Strong U.S. jobs data throws cold water on Fed rate cut expectations

The U.S. added 272,000 jobs in May, well above the 190,000 surveyed by The Wall Street Journal and well above the downwardly revised 165,000 increase in April. However, the unemployment rate rose to 4% from 3.9%. Overall, the nonfarm payrolls data could throw cold water on recent expectations that the Federal Reserve could begin cutting interest rates this summer.

US Treasury yields rose sharply on the news. 10-year yields rose to 4.427% from 4.289% shortly before the report was released. The US dollar index rose 0.5% as the prospect of a delayed easing of monetary policy in the US is likely to maintain the dollar's spreads relative to other developed markets, where borrowing costs are already falling.