The US non-farm payrolls in June greatly exceed expectations, will the expectation of a rate cut in July be shattered as a result?

Notice that the United States' job growth in June exceeded expectations for the fourth consecutive month, with a decrease in the unemployment rate, indicating that despite the economic slowdown, the labor market remains resilient. The report from the US Labor Department released a day early due to the Independence Day holiday on Thursday showed that nonfarm payrolls increased by 147,000 last month, well above the expected 110,000, driven mainly by a surge in state and local government employment. The unemployment rate fell to 4.1%. Private sector employment in June increased by only 74,000, the lowest since October last year, with the healthcare industry being the main contributor. These data are consistent with the trend of slowing hiring activity as employers deal with President Trump's unpredictable trade policies and wait for Congress to approve his signature tax legislation. Despite a slowdown in economic activity and increased uncertainty in the first half of the year, most businesses are reluctant to lay off workers. The employment data will also influence discussions among Federal Reserve officials on when to resume interest rate cuts. Federal Reserve Chairman Jerome Powell stated that the central bank is not in a hurry to lower borrowing costs until the impact of tariffs on inflation becomes clearer. Inflation pressures have remained relatively moderate so far this year. Powell recently told lawmakers that if the labor market weakens significantly, interest rates may be cut earlier than expected. Investors are expected to closely monitor tonight's extremely rare "Thursday Nonfarm Night" to gauge the possibility of the earliest interest rate cut by the Federal Reserve this month. If the June nonfarm payrolls report to be released on July 4th, the day before Independence Day in the United States, shows weakness, it may open the door for the Fed to resume rate cuts later this month. Although the market currently sees a small likelihood of a rate cut in July, many policymakers at the Federal Reserve also prefer a wait-and-see approach. Nevertheless, at least two Federal Reserve Board members, Waller and Bowman, have recently expressed openness to a rate cut. In the case of nonfarm payrolls exceeding 145,000, JP Morgan believes this could be the first event that may trigger a reassessment of the trajectory of US economic growth and largely eliminate the possibility of a rate cut in July. If businesses are feeling confident, it may be due to lower tariff expectations and higher-than-expected pass-through of tariff costs to consumers. The latest JP Morgan report indicates that after adjusting for inflation, overall cash reserves for US consumers (including checking accounts, savings accounts, and money market funds) are now more plentiful compared to the fourth quarter of 2019. The JP Morgan analysis team expects this scenario to cause a surge in US Treasury yields, which may suppress stock returns in the short term due to increased volatility, but ultimately this will be a positive outcome, with the S&P 500 index and the Nasdaq 100 index, which includes tech giants like Nvidia, Google, and Microsoft, likely to continue on a bullish trajectory in the medium to long term.