The $31 trillion Treasury market has fully priced in a Federal Reserve rate hike by year-end after May employment data crushed forecasts. Traders now see the policy move as virtually certain, eliminating any doubt about the central bank's tightening path. The jobs report's strength forced a rapid repricing across bond markets, with investors scrambling to adjust portfolios.

US job growth exceeded even the most optimistic predictions, triggering an immediate selloff in long-dated Treasuries. Yields climbed sharply as the market digested implications of persistent labor market strength on inflation pressures. The repricing reflects growing confidence that the Fed will resume hiking rates despite recent banking sector turmoil.

This complete pricing-in suggests markets believe the Fed cannot pause indefinitely when employment remains robust. Bond investors face the prospect of further yield increases, while corporate borrowers may see financing costs rise. The shift indicates confidence that labor market resilience outweighs other economic headwinds.

For investors, the message is clear: the Fed's tightening cycle may extend longer than many expected. Treasury market positioning will likely remain defensive until the central bank provides clearer guidance on timing and magnitude of any additional hikes.