[00:01] the jobs report has significantly impacted the market expectation of interest rate cuts and increases for the Federal Reserve. So, let's just jump right into this. So, the jobs report was released on Friday of last week. The
[00:14] next Federal Reserve meeting is going to be on June 17th. So, that's actually next week on Wednesday. So, before the jobs report was released, the odds that they would not change interest rates was at 96.4%.
[00:28] And there's a 3.6% chance that they would cut interest rates next week by a quarter point. And then the jobs report was released, we got the results, and it showed that for the month of May, a net 172,000 jobs were created. So, that came
[00:42] in much stronger than expectations. The expectation was that we would add with the labor market would add a net 80,000 jobs. Okay, so the jobs report came in really good. But that means that if the labor
[00:55] market is doing so well, then the Federal Reserve is not incentivized to markets because again, the labor market is apparently doing so well, so it doesn't need the help of lower interest rates. So, that
[01:10] right now, if we look at the probabilities again for the Federal Reserve's June meeting next week, the odds that they'll cut interest rates odds that they'll cut interest rates have decreased from 3.6% to now 1.8%.
[01:25] upcoming meeting. I think that there's still that fraction lingering, that 1.8% because it's going to be Warsh's first meeting as Fed And you never know what the new Fed chair is going to do, right?
[01:40] the jobs report, and then I want to show you how it impacts interest rates for But listen, as you can see, the labor market adding 172,000 jobs was a strong report because as you can see just as recently as February, the The market
[01:55] lost 156,000 jobs in a single month. So, it's been swinging you know, wildly from positive to negative. But, apparently, we've been seeing some consistency over the past 3 months. Okay, now I want to show you
[02:08] this. This is the most important data points according to the Federal Reserve, the unemployment rates, which the Federal Reserve has explicitly said in multiple FOMC press conferences. So, for the past 3 months, we're talking
[02:20] about March, April, May. It's remained unchanged at 4.3%. And this is down from the recent peak of 4.6% back in November. So, listen, relatively speaking, having
[02:34] the unemployment rates in the lower 4% range is considered very low. Again, if the labor market is not struggling, then there's no reason to cut interest rates, especially if the rate of inflation is this high.
[02:48] market expectations to see if that's what's really going on right now. So, the next meeting after this one in June will take place on July 29th. So, here's what the market expectations were before the jobs report was released.
[03:03] A 3.2% chance that they're going to cut interest rates in July. An 88.5% chance that they're going to keep interest rates the same. An 8.2% chance that they're going to raise interest rates.
[03:17] Now, after the jobs report was released with such great results, the odds for the July meeting changed to this. The odds of a rate cut in July decreased from 3.2% to 1.6%.
[03:30] The odds that they keep interest rates the same decreased from 88.5% to 85.8%. And the odds that they raise interest And the odds that they raise interest rates increased from 8.2% to 12.6%.
[03:45] So, again, this is for the July meeting. I think that the remainder of the year So, let me show you. Okay, so I want you to take a look at this. Like, I want to show you how the odds have changed so dramatically. Like, I find it
[03:57] The last Federal Reserve meeting of this year is going to be on December 9th, The interest rates is currently set to 3.75%. Before the jobs report the results were released, there was a 1.8% chance that
[04:12] that December meeting. A 49.5% chance that rates would be the A 49.5% chance that rates would be the same by then, and a 48.7% chance that rates would be higher by then. Again, after the results of the jobs report
[04:26] came in so strongly, the odds changed dramatically. So, by the end of the year, the odds that interest rates will be lower have that interest rates will be lower have fallen from a 1.8% chance to 0.5%
[04:38] basically close to 0% right now. The odds that they're going to be the same by then, by the end of the year, they've fallen from a 49.5% chance to 27.5% chance. And the odds that rates will be higher by then have increased
[04:52] will be higher by then have increased from a 48.7% chance to now a 72% chance. next meeting in June, which is going to be next week, they're most likely going to leave interest rates the same. But now, since the labor market is not
[05:06] struggling, it's less likely that we're going to get rate cuts this year. And Federal Reserve is going to increase interest rates than decrease them. how President Trump reacts to no rate cuts and even more so to rate increases.
[05:23] But honestly, can the markets and the economy handle higher interest rates right now? So, it's not going to be good for the you know, government's fiscal budget either, not just for consumers and
[05:35] But to me, I'm just going to speak honestly here. Like, it'll be strange to raising interest rates to slow down inflation, but while at the same time
[05:47] dollars. So, yeah, they're not printing trillions continuing to print billions, which is of course inflationary. So, I see it personally, I see all this as smoke and mirrors because that's the
[06:01] not? But listen, just so you have the story absolutely crystal clear. It's the rising inflation rate that's creating all this talk of the Federal Reserve needing to raise interest rates.
[06:15] So, the rate of inflation according to the CPI reports in May was 3.8%. about 3 years. So, I want to take a look at that jump in the rate of inflation. It went from 2.4% in February to 3.3% in March to
[06:32] in April. So, the May figure is coming out this May, the rate of inflation is going to come in at 4.2%. the details of the jobs reports, and I want to point this out.
[06:47] inflation is going to come in at a rate of 4.2% for May, right? It might come in lower, it might come in higher, but that's the expectation. jobs report. They're saying that Americans are seeing that their pay
[07:01] Americans are seeing that their pay increase is going up at a rate of 3.4%. Okay, so I see that as a problem. You have inflation running at 4.2% according to the CPI, the real rate of inflation is probably much higher. And then you
[07:15] have Americans seeing wage growth at 3.4%. So, I believe that this data it clearly shows that the situation is just degrading for everyday Americans. Like it's in the data, it's right in front of
[07:27] our faces. Now, in terms of what jobs are being jobs in May. Healthcare added 35,000 jobs. Local governments added 55,000 jobs. Leisure and hospitality added 70,000
[07:43] jobs. In terms of job losses, scientific research and development lost 3,900 jobs in May. Accounting lost 5,400 jobs in May. Air transportation lost 9,000 jobs.
[07:57] That's because of, you know who. And financial activities lost 22,000 jobs in May. So, that's a lot. Anyways, to recap the situation, the jobs report came in strong. So, that means that the Federal Reserve, they don't have to cut
[08:11] because there's nothing to be saved because the labor market, apparently, according to the reports, is doing so well. if anything changes from the CPI inflation report that's going to be
[08:24] now. And I'll keep you updated. Please subscribe. Thank you so much for the support, and I wish you a very nice day. Take care.