The US job market remains strong, with S&P 500 futures up 0.8%.
Analysts say that despite the rise in swap rates tied to the Fed's interest rate decision date, traders still believe that the Fed may cut rates as early as July.
On Friday, the US released its non-farm payroll report for April, which exceeded market expectations overall and saw an unexpected drop in the unemployment rate.
Non-farm Payroll Exceeds Expectations in April
The seasonally adjusted non-farm payroll employment in the US increased by 253,000 in April, exceeding expectations of 180,000 and the previous value of 236,000. This is the smallest increase since December 2022.
The US unemployment rate in April was 3.4%, the lowest since January this year. Expectations were 3.60%, and the previous value was 3.50%.
The number of unemployed people in the US in April was 5.7 million, which was little changed from the previous month.
However, the US Department of Labor revised the non-farm payroll numbers for February from 326,000 to 248,000 and for March from 236,000 to 165,000. After the revision, the total number of new jobs added in February and March was 149,000 lower than before the revision.
The US Bureau of Labor Statistics stated that employment continued to rise in the professional and business services, healthcare, leisure and hospitality, and social assistance sectors.
US Stock Futures Stable
The strong US non-farm payroll data saw the yield spread between the US 2-year and 10-year Treasury bonds at 46.7 basis points.
The yield on the US 10-year Treasury bond rose by 9.60 basis points to 3.448%; the yield on the US 2-year Treasury bond rose by 18.9 basis points to 3.916%; and the yield on the US 30-year Treasury bond rose by 6.4 basis points to 3.786%.
The yield curve inversion of the US 5-year and 30-year Treasury bonds flattened slightly, with the latest report at 37.2 basis points.
US stock index futures were stable overall, with Dow futures up 0.62%, Nasdaq futures up 0.5%, and the S&P 500 index up 0.7%.
Strong Employment Report Boosts Stock Market
A few months ago, a stronger-than-expected employment report could have led to a stock market decline due to concerns about further tightening of US Federal Reserve policy.
However, a stronger-than-expected employment report now reassures people because it indicates that the economy is actually performing well under the pressure of banking turmoil.
However, the situation reflected in the credit situation is still in its early stages.
Employment is undoubtedly a lagging indicator, but the 3.4% unemployment rate is exceptionally tight, with non-farm payroll employment exceeding market expectations for the 13th consecutive month.
Analysts say that despite the rise in swap rates linked to the Federal Reserve's interest rate decision date, traders still believe that the Federal Reserve is unlikely to cut interest rates until July at the earliest.