CITIC Securities: Non-farm data prompts market to reprice the Fed's policy path. The Fed may keep interest rates unchanged for the rest of the year.

CITIC Securities pointed out that in May 2026, the unemployment rate in the United States was 4.3%, in line with expectations; the increase in non-farm employment exceeded expectations, with the leisure and hotel industry being the main contributor. The previous value was revised upward, and the contribution of the birth-death model was lower than the same period last year. This month's non-farm data was not significantly affected by one-off factors. The strong employment demand in May can be seen from other employment data such as ADP and JOLTS, and the number of mentioned layoffs by S&P 500 companies also decreased significantly in May. The overall supply side remained stable, with the overall labor force participation rate unchanged from the previous value, and a slight increase in the participation rate of those in their prime working years. The strong non-farm data has led the market to reassess the Federal Reserve's policy path. CITIC Securities believes that the Federal Reserve will maintain interest rates unchanged this year. Attention should be paid to whether the dot plot will be published at the June Federal Open Market Committee meeting. If it is cancelled, the market may temporarily become "chaotic", losing a benchmark for pricing the Federal Reserve's interest rate path for the year. It is necessary to closely monitor the statements of this year's voting members.