U.S. Labor Market Resilience: Headline Strength or Hidden Cracks?

By Tigris Asset Management | June 2025

Markets cheered Friday’s payrolls report, sending U.S. stocks, yields, and the dollar higher. On the surface, the May data painted a picture of U.S. labor market resilience, with a steady unemployment rate and stronger-than-expected headline gains.

But look deeper, and the cracks begin to show.

The Headline vs. the Details

The headline jobs number beat expectations — but revisions to the past two months erased those gains.
The unemployment rate held steady only because labor force participation dipped.
Had participation stayed flat, the unemployment rate could have hit 4.5%.

This suggests the U.S. labor market may not be as strong as the headlines imply — a critical nuance for investors.

Political Tensions: Chaos on the Streets and in the FX Market

National Guard troops arrived in Los Angeles at Trump’s orders to respond to protests over federal immigration raids.
California’s governor accused the administration of “sowing chaos” for political gain.
The dollar gave back some gains early Monday on the back of these developments.

Trade Talks and Commodities: A Ray of Hope?

China signaled it would sell rare earths to the U.S., a move that should have been expected after last week’s call.
U.S. trade representatives are meeting in London, keeping markets on alert for headlines.

Meanwhile:

Gold prices dipped on Friday after the payrolls beat, but China added to its gold reserves for a 7th consecutive month — a sign that central banks continue to hedge geopolitical risk.

Technical levels to watch:

Support at $3,265 (50SMAV)
Resistance at $3,375/3,400

FX Markets: USD, Yen, and More

USDJPY broke above 145, driven by stops after the jobs data.
The Ichimoku cloud at 145.60 is key — this level hasn’t been breached since January.
A double bottom pattern is forming, with the neckline at 146.28.
EURUSD is steady near 1.14, with 1.1570 capping the topside.
GBPUSD dipped but held 1.3520 support.
AUDUSD reclaimed 0.65 on optimism over U.S.-China talks.

What’s Next: Data, Geopolitics, and the Dollar

China CPI, PPI, and Trade Balance
Taiwan Exports
U.S. NY Fed 1-Year Inflation Expectations

With Australia and Switzerland out, thin liquidity could exaggerate moves.

Strategic Takeaways for Investors

Short-Term (1–2 weeks):

Don’t overreact to the headline NFP print — revisions and participation are warning signs.
Watch USDJPY for potential breakouts above key technical levels.
Gold may bounce if risk sentiment sours.

Mid-Term (1–3 months):

U.S. labor market resilience may fade as participation challenges persist.
Geopolitical risk — both domestic (protests) and external (China trade talks) — could weigh on USD sentiment.
Consider diversifying out of USD exposure gradually.

Long-Term (3–6+ months):

Structural factors like demographics and immigration policy will shape the labor market’s real health.
Trade dynamics and commodity markets remain fragile — real assets and non-USD credit may offer better long-term risk-adjusted returns.

Final Thought

Friday’s data painted a picture of U.S. labor market resilience — but beneath the surface, it’s not so straightforward. Investors would be wise to look past the headlines and position for a market where political noise, trade friction, and labor dynamics collide.

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U.S. Labor Market Resilience: Headline Strength or Hidden Cracks?