Rate cut expectations dealt another blow! The US labor market continued to show strength, with initial jobless claims falling slightly to 209,000.

According to data released by the US Department of Labor on Thursday, the number of initial claims for unemployment benefits decreased by 3,000 to 209,000 people in the week ending May 16. The median forecast from a survey of economists was 210,000 people. The slight change in the number of people applying for unemployment benefits in the US last week suggests that despite some recent announcements of layoffs, the scale of layoffs remains low. After the data was released, interest rate futures traders further weakened their expectations for the Federal Reserve to resume rate cuts this year, with nearly 100% pricing in a stance of maintaining the benchmark interest rate unchanged (neither raising nor lowering rates) and the probability pricing for a rate hike in December once close to 50%. The continued claims for unemployment benefits, which serve as a substitute indicator for the number of people receiving unemployment benefits, rose slightly to 1.78 million people in the previous week. Despite well-known companies including Meta Platforms, Starbucks, LinkedIn, and Walmart announcing layoffs, the number of applicants still remains low. This indicates that the labor market continues to operate in a state of "low hiring, low firing" that has been prevalent in recent years. Economist Eliza Winger stated, "Tighter anti-fraud controls and layoffs concentrated in higher-paying tech positions might be suppressing the activity in filing for unemployment benefits. This suggests that the unusually low application data recently - far below the average of 335,000 people in the decade before the pandemic - may paint a picture that is overly optimistic about the resilience of the labor market." The four-week moving average for initial claims for unemployment benefits fell to 202,500 people, the lowest level since 2024.