The June jobs report gave markets a reality check. With 147,000 jobs added and the unemployment rate dipping to 4.1%, headline numbers beat expectations—but a closer look is warranted. Private payrolls rose by just 74,000, the weakest since last October, and the drop in unemployment was driven largely by workers exiting the labor force. Most of the hiring came from state and local governments, not private industry, reinforcing the narrative of a narrow labor recovery.
‍

Still, the data gave the Fed room to stay put. Traders quickly priced out a July rate cut, pushing yields higher and delaying expectations to September or beyond. The takeaway: the labor market isn’t strong enough to trigger hikes, but not weak enough to force cuts. For Powell, that means time to wait—and for markets, more uncertainty.