Good morning,
 
The countdown is to tipoff is on! The Knicks have been on an amazing run winning 11 straight games heading into the NBA finals. Speaking of amazing runs, coming into today’s session the S&P 500 is riding a nine-day and nine-week winning streak. Yesterday’s gains in the index were modest gaining only ~0.1% but closing above 7,600 for the first time. Small and midcap indices outperformed ending up closer to 1% after underperforming in the prior session. Tech was mixed with semiconductors and other AI hardware/infrastructure stocks trading well after the Alphabet capital raise though software was under pressure giving back much of the previous sessions gains after AI pope Jensen blessed the sector. The other big story during the day were the sharp declines across the crypto complex with Bitcoin breaking below 70k as sentiment continued to deteriorate. Earlier this week the OG HODL’er, Michael Saylor, sold a tiny amount of Bitcoin to fund dividend payments and prices are now below Strategy’s cost basis ~75k.
 
Futures have been drifting lower overnight and have started to accelerate to the downside as we approach the open. Oil prices and yields are moving higher as the US/Iran continue to exchange fire and there have been no breakthroughs in negotiations. The White House proposed new tariffs of between 10% - 12.5%, to replace the 10% temporary tariffs that were put in place after the IEEPA tariffs were struck down by the Supreme Court. This will be levied against 60 countries including China, the EU, Japan and India. Private credit headlines are back as well after another round of redemption requests were capped at Partners Group and Cliffwater. Futures are near session lows with the S&P down ~0.25% and the R2K off ~0.6%.
 

 
This morning the ADP Employment came in strong showing 122k jobs added to the economy with Chief Economist Nela Richardson saying, “Hiring was more broad-based in may than we’ve seen in the last few years.” The distribution of jobs happened across small/medium and large businesses. The only two sectors that saw declines were natural resources and mining (-3k) and information services (-7k). Healthcare and education accounted for nearly half the gains while trade, transportation and utilities added another 36k. Pay for job stayers was flat at 4.4% while job changers moderated to 6.5% from 6.6%. There have been some press reports about incoming Fed Chair Warsh. He sent a memo promising to review Fed strategies and hired conservative analysts Paul Winfree, who authored the Project 2025 blueprint, and Daniel Heil to assist with this. Separately there are reports he could look to remove forward guidance though the statement is already expected to be adjusted to a more neutral stance. A Reuters story even suggests he might not submit a DOT in the SEP (oh no!).  Yields have been moving higher they did extend to the upside after the ADP report but have given back most of that leg currently up 3-5bps with some flattening of the curve. The USD index is also moving higher. After the open final services PMIs will be released followed by ISM Services at 10:00. The Beige Book will also be released this afternoon.
 
Government Yields

• US 2yr +4bps to 4.08%, 5yr +5bps to 4.22%, 10yr +5bps to 4.49%, 30yr +4bps to 4.99%
• USD index: +$0.27 to $99.45

 
Markets in Asia were mixed overnight while European indices are under some pressure. The Nikkei was the standout closing up 2.55 at a new all-time high driven by continued strength in the tech sector. Speculation of a rate hike in June are growing louder. The only thing that could keep the Kospi from going higher was closing it for a holiday. In China markets were mixed with the Hang Seng falling >1% giving back some of the week’s gains while the Shanghai Comp ended slightly higher. Rating Dog Services PMI came in ahead of expectations. In India there was a positive revision to final services PMI which hit a six-month high however, the Sensex closed modestly lower amidst the continued geopolitical uncertainty. European indices have also been under pressure. Final Services PMIs were revised higher across the region.
 

 
Oil prices have been moving higher overnight but have just started to pullback over the last 30 minutes currently up ~1.5%.  Metals have been under pressure overnight down ~1%. Ag is moving slightly higher. Crypto continues to be under pressure. According to Coindesk - Visa, Mastercard and Strip will soon introduce a new stablecoin platform.
 

 
Palo Alto was the big earnings overnight and the company had strong results but is pulling back modestly after the recent strength, CrowdStrike reports this evening. Elsewhere within software CGNT is moving sharply lower after earnings. The big report after the close is Broadcom.
 
Earnings:
After-Market: GTLB, PANW, ULTA
Pre-Market: CXM, M, MDT
After-Market: AI, AVGO, CHPT, CRWD, DSGX, FIVE, NTSK, PVH, TLYS, VEEV, WOOF
     
Economic Data:
US:

• Mortgage Apps: -2.5% w.w prior -8.5%
  • 30yr Rate: 6.57 prior 6.65%
• ADP Employment Change: 122k  vs. 117k cons., prior 109k
• 9:45 Final Services PMI
• 10:00 ISM Services
• 10:00 Factory Orders
• 10:30 Oil Inventories
• 11:00 Fed Goolsbee
• 2:00 Beige Book
• 4:00 Fed Logan

Global:

• China Rating Dog Services: 54.0 prior 53.1
• Japan Services PMI (final): 50 prior 50
• India Services PMI (final): 59.3 prior 58.1
• EU PPI: 0.6% vs. 0.4% cons., prior 3.4%
• EU Services PMI (final): 48.5 prior 47.5
• Germany Services PMI (final): 48.1 prior 47.8