Market sees Fed rate cut probability in June reaching around 50% due to poor jobs and soaring oil prices

Summary

Market pricing for a June Federal Reserve rate cut has rebounded to approximately 50% following a disappointing jobs report that indicated a loss of jobs.PANews+ 2 This marks a sharp reversal from earlier in the week, when the probability had dropped to as low as 35% due to soaring oil prices stemming from conflict in the Middle East.Sherwoodnews+ 2 Traders are now navigating conflicting signals: a potentially weakening labor market that argues for a cut, versus a persistent oil-driven inflation risk that argues for holding rates steady.Reuters+ 2

Impact Analysis

So the market is basically getting whipsawed daily. This isn’t a signal of conviction for a June cut; it’s a signal of peak confusion. The 50% probability is just a coin toss.PANews Earlier this week, the narrative was all about the oil spike from the Iran conflict pushing rate cuts off the table.Sherwoodnews+ 2 Now, one weak jobs report flips the script completely.Reuters The Fed is caught in a classic stagflationary bind: cut to support a weakening labor market, or hold to fight inflation from the oil shock?marketscreener They want you to focus on the jobs data, but the oil price issue hasn’t gone away. All this tells me the market is too reactive. The real play isn’t guessing the June outcome. The trade is to own volatility. This back-and-forth is going to continue, creating chop. I’d rather be long vol on rates than take a directional bet here.