The American labor market just hit the brakes. Hard. The Bureau of Labor Statistics reported on July 2 that nonfarm payrolls grew by a mere 57,000 jobs in June, roughly half of what economists had penciled in.

Wall Street had been expecting something in the range of 110,000 to 115,000 new jobs.

The numbers tell a bigger story

May’s jobs number was revised sharply downward, from an initially reported 172,000 to just 129,000. That’s a 43,000-job haircut applied retroactively, which means the labor market was already weaker than anyone realized heading into summer.

The unemployment rate did come in at 4.2%, slightly better than the 4.3% that economists had forecast. Labor force participation dropped to 61.5%, meaning the unemployment rate improved partly because fewer people were actively looking for work. When people stop searching, they stop being counted as unemployed.

What this means for the Fed

Rate hike expectations for the remainder of 2026 were already modest before this report dropped. Now they’re essentially flatlined. Analysts broadly expect the Fed to hold rates steady, and some are beginning to float the possibility that rate cuts could come back into the conversation if the labor market continues deteriorating at this pace.

Treasury yields declined following the report, which is the bond market’s way of pricing in the same conclusion. Broader equity markets showed mixed reactions.

Why crypto traders should care

Bitcoin held above $61,000 in the immediate aftermath of the jobs report.

This dynamic played out dramatically in previous cycles. Bitcoin’s rallies in late 2020 and early 2021 coincided with near-zero interest rates and massive liquidity injections. The 2022 crash, conversely, mapped almost perfectly onto the Fed’s aggressive hiking campaign.

The next few monthly reports will be critical. If the labor market posts another sub-100,000 print, the conversation will shift rapidly from “no hikes” to “when do cuts start.”