U.S. May Payrolls Surge to 172K, Sparking Bets on Fed Rate Hikes Ahead of Wednesday CPI Report

According to Bloomberg, stronger-than-expected U.S. jobs data released on Friday, June 5, has redrawn market expectations for Federal Reserve policy. The May non-farm payroll report showed 172,000 new jobs added—nearly double the forecast of 88,000—igniting a sharp rally in bond yields. The 10-year Treasury yield surged to 4.55%, a two-week high, while the 2-year yield hit 4.18%, the highest since February 2025.

Traders are now focused on the Consumer Price Index due Wednesday, June 10, with derivatives pricing showing expectations for a 4.3% year-over-year increase—the largest monthly jump since 2023. Market consensus has reversed sharply; institutions including BNP Paribas now forecast the Fed will hike rates up to three times, potentially starting in December, abandoning earlier expectations for cuts in 2026.