The June Fed funds futures contract implies a peak for rates at 5.06%, which is significantly higher than the 4.94% level from the start of the week.
The market is shifting towards the Fed rather than vice versa. Tomorrow's non-farm payrolls report will be critical in that debate but for now the ADP and initial jobless claims data points to a continued robust hiring environment. It's tough to envision a significant retrenchment of the US consumer without pain in the jobs market.
In turn, the US dollar has rallied since the data with USD/JPY (below) up to 133.61 from 132.54. The euro has also fallen to 1.0556 from 1.0610 against the US dollar.
With the market pricing in strong data and the likelihood of more rate hikes, there's broad weakness in US equities and the commodity market.
