Strong payrolls cut June 2025 Fed rate cut odds as yields rise
The March jobs report showed strong payroll growth and a drop in unemployment, lowering the Fed’s perceived need to ease policy. As a result, the market’s Fed rate cut odds for the June 2025 FOMC meeting fell, with inflation fears now dominating sentiment.
Traders are reacting to firmer labor data alongside rising bond yields. The 10-year Treasury yield reportedly climbed to 4.17%, a shift from February’s jobs weakness, suggesting expectations of tighter or more prolonged policy. A Middle East conflict has also pushed oil prices higher, adding to inflation concerns and weighing further on the Fed rate cut odds.
The article notes the rate-cut market’s “YES” share implies a decreasing likelihood of a cut, but warns that limited market depth could make prices sensitive to smaller trades. For a cut to regain plausibility, traders likely need clearer signs of cooling inflation or weakening economic indicators.
Key watch items include upcoming CPI and PCE releases, plus remarks from Fed Chair Jerome Powell and Treasury Secretary Scott Bessent. Any change in their rhetoric could quickly swing the Fed rate cut odds again, affecting broader risk assets including crypto.
Bearish
Bearish. Strong payroll growth plus a falling unemployment rate would normally support expectations of a steadier economy, but here the market emphasis shifts toward inflation risk. The article ties higher inflation fears—partly from oil-driven geopolitical effects—to rising Treasury yields (10Y reportedly to 4.17%), which typically tightens financial conditions via higher discount rates.
For crypto traders, this matters because rate-cut expectations often act as a tailwind for risk assets. When Fed rate cut odds decline, liquidity expectations can weaken, and BTC/ETH frequently face sell pressure—especially during periods where yields are rising and volatility can increase.
Historically, similar setups (strong labor data + sticky inflation narrative → fewer cuts expected → yields up) have tended to pressure high-beta assets in the short term. In the longer term, if subsequent CPI/PCE prints cool and Fed messaging returns dovish, the narrative could reverse and restore demand for risk assets. Here, the near-term driver is clearly the direction of yields and the market’s shifting Fed rate cut odds, so downside risk remains higher until inflation data confirms a cooling trend.