Non-agricultural interpretation from a unique perspective

After 14 consecutive unexpected increases, U.S. non-farm payrolls data in June was slightly lower than market expectations. However, average hourly earnings and the unemployment rate are more telling. The “higher rates for longer” story continues. Because yesterday's ADP data was too strong, the market raised its expectations for non-farm data. Therefore, it is not surprising that U.S. bond yields fell when expectations failed. However, the US dollar overnight index swap pricing is still at a high of 5.43%, and the possibility of the Federal Reserve raising interest rates by 25 basis points in July is basically priced in. Therefore, the U.S. core CPI released next week is unlikely to change the above statement, but it may affect the pricing of the Fed meetings in September and November.