Strong employment data changes market expectations, and the timing of interest rate cuts by the Federal Reserve (FED) may be delayed this year.

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U.S. Treasury prices fell after stronger-than-expected employment and wage growth data was released, prompting traders to begin adjusting their rate cut bets for this year. Yields on Treasuries across various maturities rose, particularly short-term bond yields. Interest rate swap data shows that traders expect a 70% chance of a 25 basis point rate cut in September, down from about 90% expected on Thursday. Traders generally expect the Federal Reserve to keep interest rates unchanged at its meeting on June 17-18, with only a 10% chance of a rate cut in July. Kevin Flanagan, head of fixed income strategy at WisdomTree, stated, "The employment data eliminates the possibility of rate cuts in June and July. We remain cautious, given that there has been no slowdown in employment, and the market is turning its attention to whether next week's CPI can continue the downward trend in inflation."

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