This is the non-farm payroll report that the market most wants to see! U.S. employment increased by 139,000, exceeding expectations, reinforcing the expectation of a "soft landing".

The US labor market showed signs of a slight cooling in May, with the previous months' nonfarm employment numbers being revised slightly downward, indicating that US employers are more cautious about evaluating the Trump administration's economic policies and aggressive tariffs on international trade. However, this data significantly eased concerns about a recession. However, for the financial markets, this nonfarm data is what individual and institutional investors most want to see - the market reaction to this nonfarm data was "just right," better than expected but not exceptionally good, showing that the US economy still has strong momentum and no negative disruptions to the expectation of a "soft landing" for the US economy. It also did not trigger any drastic changes in market expectations for Federal Reserve interest rate cuts (traders still bet on two rate cuts this year, with the first expected in September). According to the latest data released by the US Bureau of Labor Statistics on Friday, nonfarm employment in the US increased by 139,000 last month, the lowest since February, and the previous two months were revised downward by a total of 95,000. The unemployment rate remained at 4.2%, while wage growth accelerated. The 139,000 increase in nonfarm employment was significantly better than the general expectation of around 126,000-130,000, while the unemployment rate matched economists' expectations. In the view of economists, this data may help alleviate market concerns about a possible recession in the US economy. Concerns about US companies rapidly reducing positions in the face of higher tariffs and slowing economic activity have also significantly diminished due to this nonfarm data. The Trump administration's recent suspension of some very harsh import tariffs, including those targeting China, has boosted business and consumer sentiment in the recent period. In response to the report, S&P 500 futures significantly rose, and the US dollar also increased in value, with the stock prices of the seven major tech giants sensitive to risk appetite all rising in pre-market trading. This strong and resilient nonfarm employment report for the US labor market in May, above expectations, has rounded off this week's economic data - several previously released data had disappointed the market, increasing concerns about the possibility of a US economic recession, but the better-than-expected nonfarm data largely dispelled those worries. Other indicators released during this period include a further increase in initial jobless claims and unexpected weakness in service sector activity. The highlight of the employment growth in May remains with service providers, with strong performance from the healthcare and social assistance, as well as leisure and hospitality sectors. Meanwhile, industries more affected by tariffs are raising concerns. Manufacturing employment unexpectedly declined by 8,000, the largest drop so far this year; while the transportation and warehousing industry, after a significant decline in the previous two months, recovered slightly in May. Economists and Federal Reserve officials have been facing another major issue this year, which is how much the Trump administration's efforts to cut government spending will impact the job market. The employment data shows that the federal government cut 22,000 positions in May, the largest since 2020. Economists generally point out that as federal spending cuts affect US contractors, Ivy League universities, and other institutions that rely on public funds, the US could face the risk of at least 500,000 jobs being at risk. The labor force participation rate - the percentage of the population employed or actively seeking employment - dropped to 62.4% in May, the lowest in three months. The labor force participation rate for the prime working age group of 25 to 54 also showed a slight decrease. Regarding the prospect of Fed rate cuts, officials have stated that they are not in a hurry to announce rate cuts until the exact impact of Trump's tariff policies on the US economy - primarily on the labor market and inflation data - is clearer. Other data paints a different picture of the labor market. Despite large companies like Microsoft and Disney implementing massive layoffs, job vacancies in the US unexpectedly increased in April, and overall firings domestically remain at historically low levels. Economists are also closely watching how the dynamics of labor supply and demand affect wage growth, especially as inflation risks rise again due to tariff policies. The nonfarm employment report showed that average hourly wages in the US increased by 0.4% in May compared to the previous month and grew by 3.9% year-on-year, both slightly higher than economists' general expectations, presenting a resilient labor market picture. The most wanted nonfarm data in the market: maintaining expectations of a soft landing while the expectation of rate cuts remains strong Both Goldman Sachs and JPMorgan Chase, the two largest institutions, had forecasts before the release of the May nonfarm data that the most favorable range for US stocks and even global financial markets would be for nonfarm added jobs between 115,000 and 140,000, with the latest 139,000 jobs perfectly falling within this range. Goldman Sachs predicts that nonfarm data in this range can drive the day's broad stock market benchmark - the S&P 500 index - up by 0.75% to 1%. JPMorgan Chase's forecast outlook shows that the S&P 500 index will rise by 0.25% to 1% due to this data. JPMorgan Chase stated that even if it is at the lower end of this range (115,000), it is enough to sustain the current market rally, but attention should be paid to the trend of the unemployment rate. If the unemployment rate rises to 4.3%, the daily gain in the S&P 500 index may converge to the lower end of the estimated range (0.25%), signaling that the unemployment rate may soon accelerate at a rate of 0.1-0.2 percentage points per month, especially if trade war effects fully appear or worsen. However, it should be noted that due to the changing nature of trade policies almost weekly, any forecasts are uncertain. For the expectations of a "soft landing" for the US economy and the expectations of rate cuts, this data can be considered very ideal. Looking at the trends of the three major stock index futures, the US dollar index, and the 10-year US Treasury bond yields, the market is becoming more optimistic about the prospects of US economic growth. The "CME FedWatch Tool" shows that futures traders are still betting on the first rate cut by the Federal Reserve this year in September, with the next rate cut expected in December. The Goldman Sachs team of economists believes that the Federal Reserve is still likely to announce rate cuts after the negative effects of tariffs diminish, and that the...Temporary inflationary shocks have significantly eased, leading to the normalization of monetary policy with interest rate cuts. Goldman Sachs predicts that the peak inflationary effect of tariffs will be seen in the inflation reports from May to August, and they tentatively predict that the first interest rate cut will be in December. The economic team from Goldman Sachs now expects the Federal Reserve to start three interest rate cuts starting from December instead of their previous bet on July.Economists from another major Wall Street bank, Barclays Bank, predict that the Federal Reserve will only implement one interest rate cut in 2025, followed by three more cuts of 25 basis points each in the following year (expected in March, June, and September of 2026). Before positive trade agreements and significant tariff reductions between China and the US, Barclays economists predict two 25 basis points rate cuts this year, scheduled for July and September. Federal Reserve officials are still concerned about the outlook for inflation and may choose to continue to observe. A study by the New York Federal Reserve this week shows that as local businesses in some states in the US begin to cope with the higher costs brought by Trump's trade policies, the rapid and substantial increase in tariffs has had a negative impact on overall employment levels and capital investment of local businesses. Federal Reserve policymakers, including Powell, are waiting for uncertainties surrounding Trump's tariff policies and other policies to be resolved. They generally believe that the US economy is still solid, allowing them to remain patient for an extended period. They also mentioned that it is unclear how extensive the tariffs will ultimately be and how they will impact the economy. They expect that the US unemployment rate and inflation may rise due to the negative impact of tariff policies, but the ongoing uncertainty surrounding tariff policies makes it difficult for them to predict how the US economy will ultimately evolve. They also remain concerned that inflation may rise significantly in the second half of the year. Federal Reserve Chairman Powell emphasized in a press conference after the May interest rate meeting that there is no rush to adjust the benchmark interest rate. The US economy continues to demonstrate resilience, and the current policy is moderately restrictive with the cost of further observation being quite low. He also stated that President Trump's calls for a rate cut will not influence the Fed's decisions. In the process of seeking a broader trade agreement, both China and the US agreed to temporarily reduce tariffs on multiple goods for 90 days, which makes the Federal Reserve's decision to maintain its current monetary policy seem more prudent. Economists have changed their predictions, believing that the probability of a US economic recession has significantly decreased, although many still expect economic activity to slow down. Before the positive trade consensus between China and the US, most economists were predicting a recession in the US this year.