The May NFP report has triggered a rally in the US dollar of over 0.7% against the euro, alongside significant declines in the US stock market (with the NASDAQ dropping 1.7%). The state of the US labor market has turned out significantly better than expected. In the face of persistent inflationary pressures, this should prompt the Fed to hike interest rates. The pivotal question now is not “if,” but “when” – and to what extent the new Fed Chair, Kevin Warsh, will attempt to push back against monetary policy tightening.
A few words on the data
The number of non-farm payrolls in the US labor market increased by 172k. This figure not only beats the consensus estimate (86k) but vastly exceeds even the most optimistic forecasts (125k). To make matters worse for market bulls, data for the previous two months was revised upward by 93k. Given that the Bureau of Labor…
