US jobs report anticipation

What happened: On Friday, the U.S. jobs report showed a stronger-than-expected gain of 172,000 jobs in May, with revisions to prior months also positive. This unexpected strength led to a sell-off in U.S. equities, with the S&P 500 falling 2.6% to 7,384, and the Dow Jones Industrial Average dropping nearly 700 points, or 1.4%. The strong jobs report pushed up Treasury yields, with the 10-year yield rising to 4.53%, and the U.S. dollar surged. President Trump expressed surprise at the market reaction, stating that stocks should have gone up.

Market impact: The strong jobs report increased expectations for an earlier Federal Reserve rate hike, leading to a broad sell-off in equities, particularly in tech stocks. The yield spike pressured bond prices, with the iShares 20+ Year Treasury Bond ETF (TLT) falling. The dollar's strength negatively impacted international stocks and commodities, with Canadian stocks plummeting 1.5% due to profit-taking and expectations of extended monetary tightening.

What to watch next: On Tuesday, the JOLTS report and ADP employment data will provide further insights into the labor market. On Wednesday, the ISM Services PMI and Fed Chair Powell's testimony will offer clues about the Fed's next move. The next key jobs report, for June, is scheduled for release on July 8.