U.S. Added 272K Jobs in May, Blowing Past Estimates; Bitcoin Pulls Back From 2-Month High

• Far stronger than expected U.S. job adds are likely to put a damper on ideas of imminent Fed rate cuts
• Bitcoin, stock and bond markers have all turned lower in response to the fresh data
• Bloomberg's chief economist suggested the headline number is masking the underlying weakness in the economy

The employment market in the U.S. remained strong in May with the government reporting the addition of 272,000 jobs, far past estimates for just 185,000 and well ahead of April's 165,000 (revised from a previously reported 175,000).

The May unemployment rate was 4.0% versus estimates for 3.9% and April's 3.9%.

The price of bitcoin BTC$86,947.49 fell sharply from a two-month high just shy of $72,000 in the minutes following the numbers. At press time, BTC was changing hands at $70,900, down 0.5% over the past 24 hours.

Wage data from this morning's report shows average hourly earnings rising 0.4% in May versus forecasts for 0.3% and April's 0.2%. On a year-over-year basis, average hourly earnings were higher by 4.1% versus estimates for 3.9% and April's 4.0%.

After rising through the first part of 2024, interest rates have been on a downtrend over about the last five weeks as some recent U.S. economic data had pointed to a slowdown in both economic growth and inflation – the 10-year Treasury yield ahead of this morning's numbers was at 4.30% versus a 2024 high of 4.71% in late April.

The move down in rates has been a boon for risk assets, with the major U.S. stock market averages surging to record highs and the price of bitcoin rising from about the $60,000 level to within close range of its record high just above $73,500.

Ideas that the major Western economies are about to fully enter a monetary easing cycle received further merit this week when both the Bank of Canada and the European Central Bank slashed their respective benchmark interest rates for the first time in several years. As for the U.S., the odds of a Fed rate cut have risen sharply of late, with investors prior to this morning's report having priced in about a 55% chance of a move on or before the bank's September policy meeting.

With today's strong numbers, much of this thinking is likely to be reversed in at least the short term. In addition to bitcoin's swift pullback, the 10-year Treasury yield has shot higher by 12 basis points to 4.42% and U.S. stock index futures are pointing to a lower open. Checking other indicators, the U.S. dollar has surged 0.5% and gold has tumbled more than 2%.

Bloomberg Chief Economist Anna Wong has an interesting contrary take on the data, suggesting the rise in the unemployment rate is the more important indicator of the reality of the employment situation. "[The government] model for estimating business births and deaths – which added 231,000 jobs to the nonfarm-payrolls print in May – is lagging the reality of surging establishment closures and falling business formation. We think the underlying pace of current job gains is likely less than 100,000 per month."