Traders have sharply reduced bets on a Federal Reserve interest rate increase in July following the release of disappointing US employment data.
The Labor Department reported that the US economy added only 57,000 nonfarm jobs in June, a significant miss against consensus forecasts and a notable deceleration from the 115,000 surge recorded in April.
This softer-than-expected headline number has triggered a broad-based rally in US stock markets, as investors recalibrate their expectations for monetary policy.
The repricing reflects a growing conviction that the central bank will not tighten policy further in the near term.
With the labor market showing clear signs of cooling, the case for a July rate hike has effectively evaporated.
Market participants are now focusing on the implications for the broader rate path, with many pricing in a higher probability of rate cuts later in the year if the softness in hiring persists.