Fed Holds Firm: July Rate Cut Now Unlikely Following Strong Jobs report – Markets React
Washington D.C. – July 3, 2025 – A robust U.S.jobs report released today has dramatically shifted expectations regarding federal Reserve policy, effectively extinguishing hopes for an interest rate cut at the July 29th-30th meeting. The news sent ripples through bond markets and briefly bolstered the dollar, signaling a potential pause in the Fed’s easing cycle.
The June jobs report revealed 147,000 new jobs added to the economy, exceeding analyst expectations. While a significant portion of these gains stemmed from municipal positions – specifically teaching roles – the overall strength of the data proved sufficient to dampen speculation of imminent rate reductions. Currently, the federal funds rate sits between 4.25% and 4.50%.
Bond Market Responds Swiftly
Following the report’s release, U.S. Treasury yields climbed as investors recalibrated their portfolios. Short-term bonds, particularly sensitive to Fed policy expectations, experienced the most significant movement, with two-year yields rising approximately 10 basis points and ten-year yields jumping 7 basis points to 4.35%. The dollar initially strengthened against major currencies before paring some of its gains ahead of the July 4th holiday market closure.Expert Analysis: A “Clear Summer” for the Fed
“The Fed will have a clear summer,” stated Gregory Faranello, Head of U.S. Interest Rate Trade and Interest Rate Strategy at Americet Securities.”The deciding factor for the Fed was the employment situation, and this report gives Fed Chair Jerome Powell room for a wait-and-see approach regarding monetary policy easing.”
Market sentiment has shifted dramatically.Prior to the report, there was roughly a 25% probability of a rate cut at the upcoming meeting. That figure
