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The March non-farm payrolls report was stronger than expected at +303K compared to +200K expected. The details were also better, including labor force participation, unemployment and wages. That’s led to a hawkish response in the rates market, with Treasury yields up 4-5 bps across the curve.
In terms of Fed fund futures, the market is now pricing in 66 bps in rate cuts this year compared to 70 bps before the data. The odds of a June cut are at 58% and July has ticked below 100%.
Next week, we get the March CPI report and the early consensus is +0.3% on the headline and core. Those numbers will go a long way towards pricing in what the Fed will do next.