The North American employment picture received a significant boost today as both the United States and Canada delivered much stronger-than-expected labor market reports, reinforcing the view that economic activity remains resilient despite concerns about slowing growth and elevated interest rates.

In the United States, nonfarm payrolls increased by 172,000 in May, nearly double the consensus estimate of 85,000. Adding to the strength, prior months were revised higher by a combined 93,000 jobs, while the unemployment rate held steady at 4.3% and wage growth remained firm. The report suggested that hiring momentum remains intact and reduced expectations that the Federal Reserve will be in a position to ease policy anytime soon. Treasury yields surged following the release, the U.S. dollar strengthened, and equity markets came under pressure as investors repriced the outlook for interest rates.

Canada’s labor market also surprised to the upside. Employment rose by 87,800 jobs versus expectations for a gain of just 10,000, while the unemployment rate fell sharply to 6.6% from 6.9%. The strength was particularly encouraging because it was driven by a surge of 154,000 full-time jobs, offsetting weakness seen earlier in the year. Job gains were broad-based, led by construction, transportation and warehousing, accommodation and food services, information and recreation, and manufacturing. The primary area of weakness remained wholesale and retail trade.

Taken together, the reports painted a picture of two labor markets that remain far more resilient than expected. That is the good news.

The not so good news for policymakers, is that the stronger employment data reduces pressure for additional monetary easing. In the U.S., markets pushed Treasury yields higher and increased expectations that the Federal Reserve will keep rates elevated for longer and perhaps raise rates toward the end of the year (that would be a big reversal from just a few months ago). While in Canada the report reinforced expectations that the Bank of Canada may remain on hold after its recent easing cycle. Currency markets reflected the stronger Canadian data, with USDCAD moving modestly lower following the release, although gains in the U.S. dollar from the stronger U.S. report limited the downside.

The stronger-than-expected U.S. jobs report sparked a sharp selloff in the Treasury market as traders reduced expectations for near-term Federal Reserve rate cuts. The move was led by the front end of the yield curve, reflecting a repricing of Fed policy expectations. The 2-year Treasury yield climbed 10.0 basis points to 4.15%, while the 5-year yield rose 7.9 basis points to 4.268. Longer-term yields also moved higher, with the benchmark 10-year yield increasing 5.5 basis points to 4.530% and the 30-year bond yield advancing 2.0 basis points to 4.996%. The steeper rise in shorter-dated yields highlighted the market’s view that a resilient labor market and still-elevated inflation pressures could keep the Federal Reserve on hold for longer than previously anticipated.

Stocks were mixed to start the day with the Dow higher and the S&P and Nasdaq lower (Nasdaq was down about 300 points going into the jobs report). The jobs report sent the stocks lower on the back up in yields Concerns about the events of the week with Alphabets floating of $85 billion of equity a reminder that AI is going to cost a lot, and that cost is now eating into shareowners value as equity gets diluted. In the past, stock owners benefited from buybacks of shares reversing dilution.. Now with the number of shares increasing, that idea is reversing

The declines started to accelerate with both the S&P and NASDAQ indices closed closing below their 200 hour moving averages for the first time since April 2026. For the S&P index the 200 hour moving average comes in at 7404.33. The closing price was 7383.73. For the NASDAQ index the 200 hour moving averages at 26069.49 with a closing price well below that level at 25709.43.

There were a number of losers which fell over 10% today including: