Let's briefly focus on the negative interest rate news tonight.

On the evening of June 5th, data released by the US Bureau of Labor Statistics showed that non-farm payroll employment increased by 172,000 in May, with previous two months' data also revised upward. This marks the strongest three-month employment growth in over two years.

The report stated that employment growth unexpectedly surged in May, with the US labor market continuing its robust expansion for a year.

Seasonally adjusted non-farm payrolls increased by 172,000 in May, slightly below the revised April figure of 179,000 but significantly higher than the Dow Jones survey expectation of 80,000. The unemployment rate held steady at 4.3%, meeting expectations.

This report arrived when market expectations were low, as employers had been in an environment of "low hiring, low layoffs." Although employment gains were concentrated in a few sectors, layoffs also remained moderate. However, some signs indicate that artificial intelligence is impacting employment numbers.

This report also contains signs of AI's ongoing influence on hiring. Employment in the information sector declined again in May, the 16th drop in the past 17 months. This sector includes software publishers, social networks, and internet search portals. Tech giants like Meta Platforms Inc and Microsoft Corp are conducting layoffs, partly to offset the pressure from massive AI investments.

Economist Heather Long stated, "The hiring recession is over, and American businesses are hiring again. This is a strong jobs report by every measure."

Following the data release, stock index futures mostly trended lower. After the US market opened, the three major indices fluctuated and declined, with the Nasdaq index falling over 1%. US Treasury yields surged significantly.

The semiconductor index plummeted over 5%.

Gold and silver experienced a straight-line drop, while the US Dollar Index surged.

Employment data exceeding expectations may further deter the Federal Reserve from cutting rates in the near term.

Ellen Zentner, Chief US Economist at Morgan Stanley Wealth Management, said, "Stronger employment data keeps the Fed right where it was—watching and waiting, with its focus squarely on the inflation side of its mandate. Rate cuts remain off the near-term agenda, but the lack of an inflation threat in today's report should quiet some of the chatter about potential rate hikes."

In recent days, Fed officials have grown more optimistic about the employment situation, shifting more attention to the stubborn inflation issue, which has largely taken further rate cuts off the table. The Fed has been on hold this year, having previously cut the benchmark rate by 75 basis points in the latter half of 2025.

Fed policymakers have largely stuck to the narrative of watching how the year unfolds before deciding on the policy path.

Interest rate swaps show the market has increased expectations for a Fed rate hike. Traders have fully priced in a 25-basis-point hike by the Fed by December, with about a 60% probability of a hike as early as October. Before the data release, traders had expected the next move from policymakers to be a hike in March next year. The Fed's key rate has been held in the 3.5% to 3.75% range since last December.

John Briggs, Head of US Rates Strategy at Natixis North America, said, "Now with the jobs data showing recent acceleration, the market has a second reason to think about hikes, especially with the Strait of Hormuz still closed and inflation risks persisting."

Fed officials will hold their next meeting under new Chair Kevin Warsh on June 16-17.

Seema Shah of T. Rowe Price said, "If Chair Warsh pushes for a rate cut in his first meeting, he's going against the evidence. Our base case remains that the Fed will hold rates steady throughout 2026; but if job data continues at May's pace, a hike this year will genuinely enter the discussion."

Neil Dutta of Renaissance Macro Research stated that while the market is trading today's good news as bad news for stock prices, it's just a "knee-jerk reaction" to higher rates as the bond market reprices the Fed's path.

Dutta said, "At the end of the day, if the Fed hikes because employment is expanding, I don't think that's necessarily bad for the stock market outlook. Stagflation is bad for stocks, but inflationary boom isn't necessarily."

Chris Zaccarelli of Northlight Asset Management said if the economy can continue creating jobs, keep unemployment low, and also keep inflation in check, we might be in a "sweet spot."

He said, "The Fed can't cut with inflation this high; but if inflation remains contained, especially with the Strait of Hormuz disruption, then they won't feel pressure to hike either."