The US Federal Reserve is expected to delay its rate-cutting cycle until at least September 2025, according to a report by Bank of Baroda, which cites mixed labour market signals and persistent inflation concerns.
The outlook stems from the May 2025 Job Openings and Labour Turnover Survey (JOLTS), which showed a rise in job openings to 7.76 million, up from 7.39 million in April. However, hiring fell to 5.5 million, with notable declines in the healthcare and business services sectors—indicating resilience in job availability but a softening in actual recruitment.
The report noted that the US Fed Chair has maintained a “wait and watch” stance, focusing on the impact of recent tariff actions before making any policy shifts.
Meanwhile, the US manufacturing sector showed modest recovery signs, with the ISM Manufacturing PMI climbing to 49 in June, its highest in six months. Still, as the index remains below 50, the sector remains in contraction territory, and inflation pressures persist, especially within input prices.
Investors are now keenly awaiting the US employment report for deeper insights into labour market trends that could influence the Fed’s next moves.
On the UK front, the report highlighted a slowdown in average housing price growth to 2.1% in June, down from 3.5% in May, likely due to reduced buyer activity following a stamp duty hike.
In global bond markets, yields generally fell, except in the US and China. The US 10-year Treasury yield rose slightly by 1 basis point following the Senate’s approval of a major spending bill.
In India, the 10-year government bond yield slipped 3 basis points due to easing global oil prices, but later edged up to 6.30%, mirroring broader bond market trends.
