Despite trade and political tensions, the US economy has continued to produce jobs at a faster rate than population growth, propelling the unemployment rate to a forty-year low.
According to the US Bureau of Labor Statistics, the US economy created 238,000 jobs in the non-farm sector in May. The latest figures also include upward revisions to previous employment numbers and figures for March and April were revised up by a total of 15,000.
Economists were expecting +190,000 additional positions and US financial markets reacted by sending both short-term yields and longer-term yields higher. By the end of the day, 2 year bond yields were 5bps higher at 2.48%, 10 year yields gained 4bp to 2.90% and the yield on 30 year Treasury bonds added 3bps to 3.05%. The US currency was stronger against the yen and euro but weaker against the pound. According to cash futures prices, the implied probability of a rate rise by the US FOMC at its June meeting remained at 100%.