The big economic news of the week was the +272K rise in Non-Farm Payrolls (NFP) (released on Friday, June 7). Expectations were for a number in the +180K range, so, a pretty big beat. Another data point upsetting markets (and likely the Fed) was the hottish average hourly earnings number (+0.4% growth in May, above the +0.3% consensus estimate, and to 4.1% on a YoY basis, up from 4.0% in April). Because the Fed appears to be driven by media hyped headline numbers and apparently pays little heed to leading indicators, expectations for rate cuts this fall took a hit. Markets are now pricing in just one rate cut in 2024. After the NFP report, based on lower rate cut expectations, interest rates spiked with the 10-Year Treasury’s yield up more than 15 basis points (+0.0015 percentage points) on the day (see right side of chart).

We are seeing notable uptrends in U.S. layoff announcements across construction, consumer products, energy, real estate, transportation services, and leisure/entertainment (9,180 layoffs in May 2024 versus 3,905 a year ago – outside of the 2020 health crisis, this was the highest for any May on record going back to 1995).

Well over half the reasons for layoffs came from accelerating recession pressures – bankruptcy, cost-cutting, demand downturn, economic conditions, falling sales, and foreclosure. Once again, the third highest for any May in the series of the Challenger, Gray and Christmas database.