06/05/26 Afternoon CommStock Report – Good News is Bad News for Interest Rates

A significant shift was marked in the expectations for U.S. monetary policy. Futures markets moved to assign a higher probability for the central bank raising interest rates this year over keeping the federal funds rate unchanged at 3.75 percent. The updated interest rate outlook was a reversal from the start of the year when traders were pricing in at least two quarter-point rate cuts, with some positioned for as much as a full point of easing. FOMC rate hike odds and bond market yields jumped further on Friday following the monthly jobs report.   Payroll counts were stronger than expected, just as numbers were in the leading employment reports earlier in the week. The Jobs Openings and Labor Turnover Survey (JOLTS) for April measured job openings climbing from 6.9 to 7.6 million, the highest in nearly two years. Layoffs were down, but fewer people quit their jobs, which signaled diminishing confidence in being able to find something different. Similarly, even though job openings were up, actual hirings were down, suggesting employers were stretching out the hiring process and becoming more selective due to uneasiness about the economy. Another private payrolls report for May beat expectations as it recorded growth in…