Robust Employment Figures Reinforce Delay in Rate Reduction in the U.S.
In a surprising turn of events, the US labour market demonstrated resilience in June 2025, with an addition of 147,000 new jobs and a dip in the unemployment rate from 4.2% to 4.1%. This robust jobs report has significantly reduced expectations for a Federal Reserve (Fed) rate cut in July, as the odds for a rate cut plummeted from 25% to just 5% following the data release[1][3][4].
Market participants now anticipate that the Fed will hold off on cutting rates until at least October 2025, given the stronger-than-expected employment figures. The Fed is likely to maintain its current stance, closely monitoring economic indicators but seeing less immediate need to lower interest rates due to the robust job market[1].
Janet Mui, head of market analysis at RBC Brewin Dolphin, described the June job report as a "Goldilocks" outcome, suggesting a gently slowing but solid jobs market[2]. The persistently low layoff levels and lingering labour shortages are key supports for the US labour market's resilience. The data offers reassurance that the labour market is quite stable, providing the Federal Reserve with the breathing room it needs to hold interest rates steady at its upcoming July meeting[2][3][4].
Nigel Green, CEO of deVere Group, called the June job report a game-changer, urging clients to reassess their exposure to risk-sensitive assets[3]. He cautioned that investors still banking on a September pivot are ignoring clear evidence[3]. For many investors and economists, the latest job report offers further evidence that the US labour market remains in good health[4].
The US economy added 147,000 jobs in June, and the unemployment rate dipped to 4.1%. This strong jobs report, coupled with the Fed's assessment that the labor market remains resilient, suggests that a Federal Reserve rate cut in July 2025 is highly unlikely[1][3][4]. Instead, more attention is turning to potential cuts later in the year, contingent on changes in labor market conditions and inflation data[1][3][4].
In the world of fixed income markets, the US job surge shifts the focus away from rate cuts and towards other economic factors[1]. As the labour market continues to demonstrate strength despite broader economic concerns and tariff tensions, the Fed's decision to hold off on cutting rates is seen as a positive sign for the overall health of the US economy[1].
In conclusion, the current expectation is that a Federal Reserve rate cut in July 2025 is highly unlikely, with more attention turning to potential cuts later in the year, contingent on changes in labor market conditions and inflation data[1][3][4]. The June jobs report continues to indicate things are okay, according to James, offering the Federal Reserve the breathing room it needs to hold interest rates steady[1].
Business participants now anticipate that the Fed will hold off on reducing interest rates until at least October 2025, given the stronger-than-expected employment figures, suggesting that financing may become more expensive in the near future. The Fed's current stance is likely to maintain, closely monitoring economic indicators but seeing less immediate need to lower interest rates due to the robust job market.
