Insights 
VT 
Goldman Sachs predicts US payrolls to rise by 85,000 for June, falling short of the 113,000 consensus. This decline stems from softer data trends, changes in immigration policy, and federal layoffs, which are set to raise the unemployment rate and slow wage growth.
Payrolls are projected to increase by 85,000, below the consensus and down from a 3-month average of 135,000. Contributing factors include the expiration of Temporary Protected Status for 350,000 Venezuelans (-25,000 impact) and a 15,000 decline in federal payrolls.
Unemployment Rate Outlook
The unemployment rate is anticipated to climb to 4.3%, up from 4.24% last month. This uptick is attributed to sequential gains in broader labour slack measures.
Average hourly earnings are predicted to rise by 0.3% month-on-month, with the wage survey indicator falling below 3%, indicating further deceleration. The end of worker strikes may add 6,000 jobs, but won’t significantly impact the overall figures.
Goldman Sachs suggests the June jobs report will confirm a slowing US labour market. This may influence the Federal Reserve’s dovish stance and exert downward pressure on the USD, especially if wage growth continues to show signs of disinflation.
In short, the bank sees slower job growth ahead and rising unemployment, driven by hard numbers: reduced federal hiring, immigration shifts and the end of temporary worker protections. Wage pressures are also cooling, with average hourly earnings no longer climbing as quickly as they did just a few months ago. June’s expected print follows a clear downward path when compared to previous months, suggesting a decelerating trend across several indicators.
Strategy and Market Impact
Now, looking ahead, this sets the tone for a rethink in terms of positioning. With payrolls expected to undershoot both historical trend and consensus, there’s a higher likelihood that the labour market is softening faster than many baked in. The anticipated 4.3% unemployment figure marks a tangible increase, not just a temporary fluctuation, especially as broader measures also point to growing slack.
On our side, this kind of data usually amplifies bets that the central bank will maintain a softer approach. That has direct implications. As implied volatility typically compresses in a scenario where policymakers are less likely to raise interest rates, it may be worth scaling back exposure to upside tail risks. Less momentum in wages helps reinforce this – the sub-3% survey indicator suggests real wage growth is losing steam, providing less justification for continued monetary restraint.
From a tactical lens, elevated short-dated interest rate options may not sustain their value if rate expectations recalibrate lower. Front-end premiums could drift in response. One can’t ignore the dollar, either: if disinflation in earnings continues, it moves in line with recent declines in real yields. The greenback could weaken further. That’s not hypothetical – it’s already started to show in the lower end of recent ranges.
Meanwhile, we should be mindful of break-evens across the weeklies. With a weaker jobs report previewed here, those deeply embedded in cyclical exposure may consider controlled downside hedges. That said, shorting vol outright now carries the risk of reaction to policy commentary, especially in the tail end of the month.
Moreover, in contracts sensitive to hourly pay data – especially when comparing revisions – skew could steepen again. The late effects of labour disputes ending might cause minimal jobs gains, but only at the edges, and won’t hold up the broad trend. Rebounds from those will likely be muted and not directionally supportive.
All told, any renewed softness in employment coupled with moderating wages typically implies reduced forward guidance risk. In that context, it may be more productive to shift strategies toward asymmetric outcomes rather than directional conviction. There’s more edge, we believe, in betting on positioning errors later being corrected than trying to predict exact moves today.
