Good morning and Happy Friday,
 
US equities were broadly higher yesterday despite Tech weakness. Rotational activity was evident as lagging sectors like Healthcare and Financials led the way higher. Oil and Treasury yields fell as Iran headlines leaned positive, providing a tailwind for the broader market and especially small caps as the Russell 2000 outperformed. The equity strength didn’t spill over into Bitcoin however, as the asset continued to slip and approach $60K.
 
Heading into this morning’s May payroll report, equity futures were under pressure overnight though Dow futures were modestly higher. Tech/semis continued to slump in the pre-market (along with global peers). Treasury yields were flat. The jobs data came in hot, doubling the consensus estimate while the prior two months saw upward revisions totaling 93K. With last month’s revision, the past three payroll gains have been a robust 214K, 179K and 172K. The unemployment and participation rate held steady at 4.3% and 61.8%, respectively. The biggest areas of job growth were Leisure and Hospitality (70K), local government, surprisingly, (55K) and Health Care (35K). Areas of losses included Finance (-22K). Yields jumped after the print. The 2y went from flat to +10bp. S&P futures fell to session lows on the jump in rates, tried to bounce but headed back to session lows.
 

 
The labor market is showing no signs of stress, and that leads to a healthy US economic outlook overall. The Fed is now even more likely to concentrate its focus on inflation. A full 25bp cut by December has been priced back into the market, up from 16bp yesterday.  
 

• US 2yr +9bps to 4.14%, 5yr +8bps to 4.27%, 10yr +6bps to 4.54%, 30yr +4bps to 5.02%
• USD index: +$0.16 to $99.54

Outside of the payroll data news flow was relatively mild. S&P decided not to change its index inclusion rules to provide a fast track into the index for huge expected IPOs like SpaceX, Anthropic and OpenAI.
 
Major European indexes are trading higher, reversing earlier losses, though semis are under pressure (ASML -3%, Infineon -6%, STMicro -4%).  EU final GDP was revised sharply lower, from 0.8% to 0.3%. Japan closed out the week with a 1% decline for the Nikkei, finishing modestly higher for the week. In China, Hong Kong and Shanghai indexes ended lower as well and finished the week down ~1%. Like in Europe, tech/semis came under pressure in the region- South Korea’s Kospi fell over 5%.  
 

 
 
Oil prices continue to drift a bit lower after peaking on Wednesday. ICE Brent is hovering just under $95 and its 50d ma after peaking ~$99 earlier in the week. The metals complex was hovering around unchanged ahead of the jobs report but has moved lower since as the USD rises and the prospect of rate hikes down the road increase. Gold is down nearly 2% trading just over its 200d (~4,420). Silver and copper have accelerated to the down both off >2%. Crypto is pressured by those same dynamics but had already been moving sharply lower throughout the week and there is a new issue creating a bit of a crisis of confidence. Zcash (ZEC), which at a high level is viewed as a privacy token with similar tokenomics to Bitcoin, is falling ~40% after Shielded Labs,  an organization that supports the Zcash ecosystem, identified a counterfeiting vulnerability within the tech stack with the help of Opus 4.8. The security loophole had been open since 2022 and has since been closed with no evidence that any counterfeiting had taken place. Optically this comes at a terrible time for the project which seemed to be getting some traction recently (at least a lot of social buzz with the move higher in price). That being said, this raises concerns around security across the complex and is leading to sharp declines across the board. Bitcoin is down ~2% and 15% for the week holding just above the YTD lows ~62k. Ethereum is hitting new YTD lows ~1,650 down >5% and nearly 20% for the week. Outside of Zcash a ton of alt coins are down between 5% - 20%.
 
 

 
Earnings:
After-Market (Thrs): AGX, CURV, DOCU, GWRE, IOT, LULU, NX, PL, RBRK, TTAN
Pre-Market (Fri): ABM
     
Economic Data:
US:

• Non-farm payrolls: 172K vs 85K cons, prior 179K, revised up from 115K
• Unemployment rate: 4.3% vs 4.3% cons, prior 4.3%
• Used Car Prices: 3.6% vs 1.8% prior
• 1:00pm Rig Count
• 3:00pm Consumer Credit

 
Global:

• India rate decision: Hold at 5.25% as expected
• India Q1 GDP y.y: 7.8% vs 7.2% cons, prior 8.0%
• Japan Household spending (April): 1.6% m.m / -0.5% y.y vs 0.8% / -1.5% cons, prior -1.3% / -2.9%
• Japan Real wages: 1.9% vs 1.7% cons, prior 1.4%
• France Industrial Production m.m: 0.1% vs -0.2% cons, prior 1.4%
• Taiwan CPI m.m / y.y: 0.26% / 2.2% vs prior 0.46% / 1.74%  
• Europe GDP 3^rd est y.y: 0.3% vs preliminary 0.8%
• Europe Employment change (Q1) y.y: 0.5% vs 0.5% preliminary