Treasuries tumble as traders price in Fed rate hike after strong jobs data

May payrolls crushed expectations at 172,000 new jobs, sending the 2-year yield surging 13 basis points and forcing markets to confront a reality nobody wanted: higher rates aren't going anywhere.

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Add us on Google by Editorial Team Jun. 6, 2026

The US economy added 172,000 jobs in May, roughly double what economists expected. The reward for all that hiring? A violent sell-off in Treasuries and a rapid repricing of what the Federal Reserve does next.

Traders are now fully pricing in a 25 basis point rate hike before the end of 2026. Not a cut. A hike.

The numbers that broke the narrative

Economists had penciled in roughly 85,000 new nonfarm payrolls for May. The actual figure came in at 172,000, more than double the consensus estimate. The unemployment rate held steady at 4.3%, offering no relief to anyone hoping the labor market was cooling.

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The bond market’s reaction was immediate and unforgiving. The 2-year Treasury yield, the maturity most sensitive to Fed policy expectations, jumped as much as 13 basis points to 4.17%. The 10-year yield climbed above 4.53%.

Market pricing now shows a 60 to 70 percent probability of a Fed hike at either the October or December meeting.

Risk assets take the hit

The Nasdaq dropped nearly 3% in the session, as growth stocks bore the brunt of the repricing.

Bitcoin fell below $61,000, continuing a pattern that has repeated every time the market recalibrates toward tighter monetary policy. When risk-free yields go up, the opportunity cost of holding assets with no yield, like Bitcoin, increases.

This isn’t a new dynamic. It’s the same playbook from early April, when a surprisingly strong March jobs report similarly crushed rate-cut expectations and sent risk assets lower across the board. The difference now is that traders aren’t just pushing back the timeline for cuts. They’re pricing in the opposite direction entirely.

What this means for crypto investors

Higher rates mean traditional fixed-income instruments, Treasuries, money market funds, corporate bonds, offer increasingly attractive yields. When a 2-year Treasury yields 4.17% with essentially zero credit risk, the bar for holding volatile assets gets meaningfully higher.

DeFi yields, which partially compete with traditional fixed income for capital allocation, become relatively less attractive as Treasury yields rise. Stablecoin yields that once looked compelling against a zero-rate backdrop now compete with risk-free alternatives pushing well above 4%.

Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.