In June, non-farm payrolls in the United States grew by 147,000, exceeding expectations, showing that the job market remains resilient. The unemployment rate unexpectedly fell to 4.1%, alleviating concerns about an economic slowdown. Despite strong employment, wage growth has slowed moderately, and inflationary pressure is controllable, providing room for the Federal Reserve to maintain interest rates. As a result, the market's expectations for the Federal Reserve's interest rate cut in 2025 have been slightly lowered, and interest rate policy has become more wait-and-see. At the same time, Trump's $3.4 trillion fiscal bill and the upcoming tariff threat have increased policy uncertainty, posing a potential disturbance to the market.

Non-farm payrolls exceeded expectations, and the job market showed resilience

Although the market had generally expected the US economy to slow down, and the "whistleblower data" once dropped to 100,000, the June non-farm payrolls report once again broke the pessimistic expectations. The US added 147,000 non-farm jobs in June, significantly higher than the revised May data (144,000). Analysts believe that this shows that the US job market has maintained strong resilience under multiple macro headwinds. It is worth noting that in addition to the May JOLTS job vacancy data, a number of leading indicators have suggested that the non-farm may be weak this time, but the results prove that the labor market still has strong endogenous momentum.

The unexpected drop in unemployment rate echoed the increase in jobs. The unemployment rate dropped to 4.1% in June, significantly lower than the 4.4% previously predicted by some institutions. This has eased market concerns about economic slowdown to a certain extent and also left the Federal Reserve with more flexibility in its policy choices.

Wage growth slowed down moderately, and inflation pressure was controllable

Compared with the growth of jobs, the salary data released another signal. The wage growth rate in June showed a slight decline in both year-on-year and month-on-month dimensions, with the year-on-year growth rate falling from the revised 3.8% to 3.7%, and the month-on-month growth rate slowing from 0.4% to 0.2%. Analysts believe that this means that although the demand for employment remains strong, the pressure on companies' salary expenditure has eased.

For the Federal Reserve, wage growth is an important reference for measuring potential inflation. This mild decline will help curb the risk of a wage-driven price spiral and allow the market to reassess the sustainability of inflation. Analysts generally believe that the wage data and employment growth work together to show that inflationary pressure is not out of control, which provides more basis for the subsequent interest rate policy to remain unchanged.

Interest rate expectations are moderately adjusted, and the policy path is more wait-and-see

The resilience of the job market and the fact that wage growth did not exceed expectations have led to a slight hawkish repricing in the federal funds rate futures market. The current market expectation for the cumulative rate cut in 2025 has been lowered from 67 basis points (bps) before the release of the employment data to about 62 basis points. This change reinforces the Fed's tone of keeping interest rates unchanged at this month's interest rate meeting.

In the absence of a substantial deterioration in the recent macro environment, analysts expect the Fed to continue to wait and see, relying more on subsequent data to judge the balance between inflation and economic growth. The repricing of short-term interest rates and policy paths has also prompted the bond and foreign exchange markets to rise first and then stabilize. Although the US dollar index rose after the release of employment data, the gains were quickly reversed, indicating that traders are still cautious about the policy outlook.

Trump's "huge bill" and tariff threats add new variables

In addition to employment data, domestic policies and trade situations in the United States also bring additional uncertainties in the short term. The $3.4 trillion "Big Beautiful Act" proposed by Trump has been successfully reviewed by both houses of Congress and is about to be signed into law. The bill covers a number of adjustments to government spending, taxation and domestic affairs, including the elimination of federal taxes on overtime pay and tips, and a 12% tax cut for households with annual incomes below $100,000. Analysts believe that this move may boost the disposable income of middle- and low-income groups to a certain extent, but at the same time, cuts to federal Medicaid and SNAP may also bring about structural differentiation on the consumer side in some areas.

What is more noteworthy is the uncertainty of the direction of trade policy. In a public speech in Maryland, Trump reiterated that he would send unilateral tariff letters to multiple trading partners as early as today until the deadline of July 9. This statement has brought new challenges to foreign trade sensitive sectors and supply chain companies. Although the specific trading partners and product categories involved have not yet been disclosed, analysts believe that against the backdrop of strong employment data and the lack of significant appreciation of the US dollar, any signs of tariffs being implemented may cause market fluctuations.

Analysts warn that with the arrival of the US Independence Day holiday, market liquidity may be tightened in stages, and the risk of price fluctuations under low liquidity during the holiday cannot be ignored. The subsequent impact of the "Big Beautiful Act" on the fiscal deficit, the sustainability of the labor market participation rate, and the pace of trade policy implementation will continue to be key factors that the market will pay close attention to.