"U.S. interest rates will be cut this year" may be one of the biggest and most important trading arguments for investors in early 2024, contributing to a largely optimistic view and pushing large-cap and tech-heavy U.S. stock indexes to new highs in June. But May's jobs report unexpectedly upended that notion, while also complicating where policymakers should go from here. Jeffrey Cleveland, director and chief economist at Payden & Rygel, said the rationale for a rate cut at the start of the year was based on hopes that inflation and job growth would cool, but neither of those expectations has materialized so far. If the economy continues to grow and avoid recession, stocks will continue to rise and hit record highs over the next six to 12 months. If the Fed does not cut rates while inflation remains high, our view is that the environment for continuing to hold Treasuries may not be so bad. Analyst Sean Snaith said the surprise jobs report in May was not good news for the Fed and "should remove any hope of a rate cut this year".