The market has taken down the implied probability of a June rate cut from upwards of 75% last week down to 42% at present. The latest leg in the shift came after a solid but unspectacular non-farm payrolls report.

Nick Timiraos from the WSJ highlights the Fed’s view:

The April jobs report makes a June rate cut less likely (even though that is a world away) because there will only be one more employment report before then.

For now, it means the Fed doesn’t have to say anything on June at next week’s meeting

For the year ahead, the market is now pricing in 111 bps in easing, about 20 basis points below what it was pricing last week. The combination of this data, GDP, ISM manufacturing, PCE data and corporate comments about consumer spending (especially Visa) has the market feeling good about the state of the economy — or at least the state of the economy heading into the tariff war.

It all makes me wonder: Where would the market be right now without the tariffs? Inflation falling, the Fed cutting even as economy accelerated and Congress focused on the tax package.