The Wmax macro research team combined the latest non-farm employment data, all-category asset prices, Federal Reserve officials' statements, White House remarks and global institutional views to conduct comprehensive research and judgment. The recent higher-than-expected employment and continued high inflation data have completely shattered the interest rate cut expectations released by the new Federal Reserve Chairman Warsh during the nomination stage. The hawkish camp within the Federal Reserve continues to grow, the logic of interest rate pricing has been completely reversed, and major assets such as U.S. bonds, gold, and the U.S. dollar have simultaneously fluctuated violently. rely onMacro data tracking system与Cross-asset linkage monitoring model, Wmax continues to sort out the context of policy games for investors, dismantle the logic of market fluctuations, and accurately capture trend turning points and potential risks.

Data exceeds expectations across the board: Labor market resilience rewrites interest rate expectations

The latest May non-farm payroll data released by the U.S. Bureau of Labor Statistics has become the core trigger of this market turn. Data show that the United States added 172,000 non-farm jobs in May, while employment data in March and April were revised upward by 93,000. Employment growth in the past three months hit a new high in more than two years, and the unemployment rate remained stable at 4.3%. From the perspective of employment structure, this round of employment growth is mainly concentrated in the two major sectors of leisure hotels and medical and health. The manufacturing boom has bottomed out and the number of job vacancies has increased, which comprehensively confirms the strong resilience of the U.S. labor market. Comparing historical data, affected by the Trump administration's tightening immigration and tariff policies, the United States will create fewer than 10,000 new jobs per month in 2025, while the average monthly new jobs in the first five months of 2026 will rebound to 114,000. Against the background of shrinking labor supply, this employment report completely overturns the original logic that "weaker employment will force interest rate cuts."

Combined with the previous persistently high inflation data, under dual pressure, the global interest rate market quickly completed re-pricing. Wmax interest rate derivatives monitoring data shows that the current market has fully priced in a rate hike by the Federal Reserve in 2026: traders are betting on a 25 basis point rate hike at the December interest rate meeting, and the probability of a rate hike in October has reached 60%. Affected by the rising expectations of interest rate hikes, U.S. Treasury bonds suffered concentrated selling, and all-term yields rose simultaneously: the 2-year U.S. Treasury yield rose 11 basis points to 4.15%, setting a new high for the year; the 10-year U.S. Treasury yield rose 6 basis points to 4.53%, and the 30-year U.S. Treasury yield once again stood at the 5% mark, and the yield curve showed obvious bearish characteristics.

The asset linkage effect was quickly transmitted to the entire market: the U.S. dollar index followed the trend and strengthened, while international spot gold suffered a heavy setback, plunging nearly $100, or 2.5%, during the day. The previous upward trend based on expectations of interest rate cuts came to an abrupt end. BlackRock, Natixis, Brandi Global and many other leading institutions agree on the current situation: the rebound in employment combined with the risk of energy-driven inflation has shifted the focus of the Federal Reserve's policy to anti-inflation, and the Federal Reserve has lagged behind the inflation curve in stages.

Collective defection within the Fed: Dovish tone fades, policy differences intensify

Since the beginning of the year, the Fed’s policy direction has undergone a subversive shift. At the beginning of the year, the market was generally worried about weak employment, and interest rate cuts were the mainstream trading logic. Now, under the impact of successive unexpected data, senior Federal Reserve officials have collectively turned hawkish, and the internal policy stance has completely diverged. A typical representative is Fed Governor Waller. From 2025 to early 2026, he always supported interest rate cuts due to concerns about employment decline. Now he has clearly withdrawn his dovish tendency and bluntly stated that if inflation cannot fall back quickly, he will no longer rule out the option of raising interest rates. This change of attitude quickly spread among the Fed’s decision-makers.

As early as the interest rate meeting at the end of April, three governors had already voted against, advocating turning hawkish and opening a window for raising interest rates; today, more and more officials have publicly stated that in an environment where inflation has been above the 2% policy target for a long time, the conditions for an interest rate cut are not met. For new Fed Chairman Warsh, the situation is getting more difficult. During the nomination stage, Warsh had optimistically predicted that Trump’s New Deal and the spread of AI technology would boost productivity and suppress inflation, and the Federal Reserve would have ample room to cut interest rates. However, the actual data deviates seriously from expectations: U.S. inflation has been higher than the policy target for many consecutive years, and the IMF has postponed the time point for U.S. inflation to fall back to 2% from mid-2026 to the end of 2027.

Officials are generally concerned that continued high inflation will damage the credibility of the Fed's monetary policy. Currently, on June 16-17, after Wash takes officeFirst interest rate meetingBecome the focus of the entire market. Wmax judges that unless the CPI data to be released on June 10 drops significantly, this meeting will be faced with a serious policy dilemma. The biggest suspense in the market has become whether Wash will give up his dovish stance during the nomination stage and move closer to the hawkish camp. Looking at Wall Street, mainstream investment banks have collectively adjusted their forecasts: all have canceled expectations for an interest rate cut in 2026, and only a few institutions have retained the possibility of a single interest rate cut in 2027. The market pattern has completely switched from "waiting for interest rate cuts" to "gambling for interest rate increases."

The White House has a conflicting attitude: interference from the election cycle adds another variable to the policy game

From a fundamental perspective, most voters have a sluggish evaluation of the current economic performance, but the eye-catching non-agricultural data is regarded by the White House as strong evidence of the results of the administration. Trump publicly refuted the market's concerns about inflation, emphasizing that "economic growth does not equal inflation" and did not accept the logic that stronger employment will push up prices. Hassett, director of the White House National Economic Council, also spoke out simultaneously, calling on the Federal Reserve to maintain a wait-and-see attitude. He bluntly stated that there is still a lot of room for interest rate cuts in the current market and opposed a hasty increase in interest rates.

The stark contrast between the views of the White House and the Fed's decision-makers also makes the Fed's policy choices more complicated. Several institutions have given different interpretations: Bank of America believes that strong employment has basically locked in the Fed's hawkish turn; Lazard said that if the core CPI to be released next week rises again, it will completely end the easing logic; Northern Light Asset Management has a different view, believing that in the context of the continued blockade of the Strait of Hormuz and the unresolved energy risks, the Fed may suspend interest rate increases in the short term; Glenmede also judged that the June interest rate meeting is likely to keep interest rates unchanged, and subsequent trends will be highly dependent on energy prices and inflation data.

Wmax comprehensively combed through multiple views and analyzed that the four major factors of election demands, inflationary pressure, employment resilience, and geo-energy risks are intertwined, making it difficult for the Federal Reserve to make unilateral radical actions. In the short term, "holding steady and taking a hawkish stance" may be the best option, but the door to mid- to long-term interest rate hikes is not closed. The current policy decisions of the Federal Reserve are also superimposed on the political pressure of the U.S. mid-term elections, and the differences in the positions of various parties have further amplified market uncertainty.

Wmax market outlook research and core tracking clues

Combining the four major dimensions of data, policy, politics and geography, Wmax makes a comprehensive judgment on the subsequent market and Fed path:

1. policy path: There is a high probability that the June interest rate meeting will maintain the interest rate range of 3.50%-3.75%, but the wording of the meeting will be significantly hawkish, sending a signal to be wary of inflation and retain the option of raising interest rates; whether to raise interest rates during the year will entirely depend on the two core variables of CPI and energy prices.
2. Major asset classes: U.S. bond yields are easy to rise but difficult to fall, and long-term interest rates continue to be under pressure; the U.S. dollar index remains strong relying on expectations of interest rate hikes; gold and U.S. stock risk assets will still be under adjustment pressure, and it will be difficult to reverse the weak pattern in the short term.
3. core risk: The conflict between the United States and Iran continues to push up oil prices, further exacerbating the stickiness of inflation; the approaching election has triggered expectations of policy intervention, disturbing the independence of the Federal Reserve; short-term fluctuations in employment data have triggered a recurrence of market expectations.

In the future, we will focus on tracking three key nodes: first, the May CPI data of the United States on June 10, which determines the strength of short-term interest rate hike expectations; second, the Federal Reserve interest rate meeting and Warsh’s first policy statement on June 16-17; third, the shipping situation in the Strait of Hormuz and international oil price trends.