Cathay Haitong: May U.S. Jobs Surprise Lifted Rate Hike Bets, Raising Risk of June Liquidity Shock

A Cathay Haitong research note said stronger-than-expected U.S. nonfarm payrolls data for May signaled a stabilizing and improving labor market, prompting markets to price in higher odds of interest-rate hikes and triggering a broad repricing of assets. According to ChainCatcher, the note said the U.S. dollar strengthened, U.S. Treasury yields jumped, U.S. equities fell sharply, and gold weakened. Cathay Haitong added that divisions remain within the Federal Reserve, and it expects the Fed may still avoid raising rates within the year. However, it warned that markets in June could face a liquidity shock, and U.S. stocks may enter a volatility period lasting at least one to two months.