Both U.S. Indices and the Dollar saw gains on Thursday, while Treasuries and Gold sold off in the wake of the strong jobs report, which continues to push out the narrative of a need for a Fed rate cut, especially in July. Highlighting this, Refinitiv money market pricing now sees 51bps of cuts by year-end (vs. 66bps pre-data) and a 4% chance of a 25bps cut in July (vs. 25% pre-data). Back to US NFP, the headline printed 147k (prev. 144k), much above the Street consensus 110k, the Unemployment rate unexpectedly fell to 4.1% from 4.2% (exp. 4.3%), while the wages metrics were cooler than anticipated. Alongside NFP, Jobless Claims also fell to 233k (exp. 240k, prev. 237k), and also below the bottom end of the forecast range. In later trade, ISM Services for June rose to 50.8 (exp. 50.5, prev. 49.9), and within the breakdown, both the prices paid and employment fell. Sectors are also exclusively in positive territory, aside from Materials, which is flat, with Technology leading the gains. The Dollar is firmer with safe-haven FX (CHF, JPY) the notable laggards, while the Pound is one of the only G10s gaining against the Dollar and attempting to recoup some of Wednesday’s weakness. Treasuries are weaker with the greatest losses seen in the short end. In the establishment survey, headline Non-Farm Payrolls rose by 147k in June, above the 110k consensus and up from a prior, revised 144k. The two-month net revisions were +16k, versus the previous -95k. The print was toward the top end of analyst forecasts, with the most optimistic expecting 160k. The strength of the report was primarily driven by a 73k increase in government employment, led by a 40k gain in state government education — a sharp acceleration from last month’s 3.6k increase. Government employment rose 73k M/M, well above May’s 7k gain. Private payrolls, by contrast, rose just 74k, down from 137k previously, highlighting how government hiring offset softer private sector gains. In the household survey, the Unemployment Rate unexpectedly fell to 4.1% from 4.2%, against expectations for a rise to 4.3%. However, a decline in the participation rate may have contributed to the drop. Overall, the labour market remains resilient, adding nearly 150k jobs — in line with the three-month average (150k) and 12-month average (151k), and above the six-month average (130k). The Unemployment rate remains well below the Fed’s year-end median projection of 4.5%, allowing policymakers to maintain a patient stance. This gives the Fed scope to monitor how trade policies influence inflation in the coming months, despite political pressure to cut rates. Average hourly earnings were cooler than expected at 0.2% M/M and 3.7% Y/Y, but wage growth is not a current focus for the Fed, as the labour market is not seen as a source of inflationary pressure. In response to the report, money markets pared back Fed rate cut pricing, with 52bps of easing now priced in by year-end, down from 66bps pre-data. September pricing now implies 20bps of cuts — roughly an 80% probability of a 25bps move — down from 30bps, which had fully priced a September cut. ISM Services rose back into expansionary territory for June and printed 50.8, above the expected 50.5 and the prior 49.9. Prices paid encouragingly dipped to 67.5 from 68.7, but Employment fell to 47.2 from 50.7. Business activity and new orders jumped to 54.2 (prev. 50.0) and 51.3 (prev. 46.4), respectively. Supplier deliveries slipped but remained above 50, while inventories and imports lifted back into expansionary territory. The backlog of orders fell to 42.4 from 43.4. ISM Chair Miller said, “June’s PMI level is a welcome return to expansion, although slow growth and economic uncertainty were frequently referenced by respondents”, and as expected “The most common topic among survey panellists continued to be concerned about impacts related to tariffs.” Overall, Oxford Economics says “The anecdotes highlight uncertainty remains an issue, which is expected to remain a drag on business investment in equipment and hiring in H2. There were some concerns about the tensions in the Middle East, but that risk has mostly faded.” The US International Trade Deficit widened to 71.5 billion in May, slightly wider than the expected 71.0 billion. Summarising the data, Oxford Economics write “the May trade data revealed a moderate expansion of the trade deficit due to a drop in exports and minimal change in imports. Compared to Q1 levels, imports are down meaningfully, implying a major GDP contribution from trade of more than 3ppts”. Elsewhere, Oil closed lower by 0.82% while Gold was weak, closing lower by 1%.
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For anyone following my Platinum Service it made 160 points on Friday and is now ahead by 310 points for July after closing June with a gain of 3530 points, having closed May with a gain of 3606 points, after closing April with a gain of 7685 points after closing March with a gain of 2254 points while closing February with a gain of 4180 points. January ended with a gain of 2768 points while 1997 points were gained in December. October ended with a gain of 2179 points, after closing September with a gain of 4402 points, following a loss of 301 points in August. July gained 1908 points while June saw a gain of 2074 points. The Platinum Service made a record 9619 points in October 2022. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 2300 points. I have a YouTube Channel which contains recent interviews I have given This can be viewed by clicking HERE Please subscribe to this for new interview notification
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