Bond Traders Await US Jobs Data to Cement Fed Rate-Hike Bets

Bond traders will look to the US employment report on June 5, 2026, to validate wagers that the Federal Reserve will raise interest rates by mid-2027, if not sooner, amid rising energy costs and stubborn inflation. The May nonfarm payrolls are expected to show the economy added about 90,000 jobs, holding the unemployment rate steady at 4.3%, according to a Bloomberg survey. A resilient labor market, combined with oil-price spikes tied to the Iran conflict, has already tightened financial conditions equivalent to three-quarters of a point of Fed hikes, per Bloomberg Economics. Benchmark 10-year Treasury yields stand near 4.44%, up roughly half a point since late February, while two-year yields have surged about 0.6 point to around 4%. “If inflation numbers stay high and job growth remains solid, then the market could start to price in a more aggressive shift higher,” said Gregory Faranello of AmeriVet Securities. The Fed’s preferred inflation gauge rose 3.8% annually in April, well above the 2% target, reinforcing expectations that the central bank under Chair Kevin Warsh will remove its easing bias at the June meeting.