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The US added 272,000 jobs in May, in figures that were far higher than forecast, pushing bond yields up and stock futures down.
Economists polled by Bloomberg had expected a 180,000 rise in non-farm payrolls last month.
Treasury bond yields surged and stock futures swung into the red after the release of the payrolls data, which traders bet could discourage the Fed from cutting interest rates twice this year.
The release comes less than a week before the Federal Reserve’s June meeting when the US central bank is expected to keep interest rates at a 23-year high of 5.25-5.5 per cent.
US inflation has proved more obstinate than previously thought and the Fed has taken a cautious approach to lowering borrowing costs.
According to Friday’s figures from the Bureau of Labor Statistics, US unemployment rose to 4 per cent from 3.9 per cent.
The number for April, previously estimated at 175,000, was downgraded to 165,000.
This is a developing story