Happy Jobs Friday,
 
After gapping higher at the open on Wednesday US equity markets have been drifting lower amidst some profit taking following a sharp rally from last week’s lows. Trough to peak the S&P 500 was up nearly 500pts (~6.5%) in less than a handful of trading sessions. Taking some of the wind out of the sails over the past couple of days were the bounce in oil prices and Treasury yields as shots were fired in the Red Sea and details of the Iran/Oman proposal were leaked to the press. The proposal blocks the travel of US/Israeli ships and includes a fee, which has been a red line for the administration. The S&P 500 ended yesterday’s session down 0.2% just over 7,700 while the equal-weight/small cap indices were down a little more than 0.5%. Energy was the only sector with meaningful gains while mega-cap tech/semis outperformed. Software was under pressure after a couple of disappointing earnings reports.
 
Futures were pointing to a higher open ahead of this morning’s jobs report as oil prices and yields were both pulling back modestly. The jobs report was disappointing with nonfarm payrolls falling 23k along with a negative revision of 103k to the previous two months. There were big declines in government (-53k) and leisure & hospitality (-40k) which some are discounting given the potential seasonal impact on gov’t and unwind of World Cup in the latter. Total private hiring was up 30k in line with the revised reading from last month as construction was the positive standout (+22k).  The unemployment rate actually ticked down to 4.1% with a decline in the labor force while participation rate was also down 0.1% from last month to 61.4%. Wages came in below expectation up 0.1% (vs. 0.3%) while the workweek was unchanged at 34.3.   Rates markets reacted swiftly with the 2yr down falling ~10bps at the lows as markets recalibrate rate hike expectations. The USD also moved lower. Just after 8:30 Japan’s Finance Minister said lines of communication with the Treasury are open and “both sides won’t hesitate to intervene”. The Yen rallied sharply from ~158.50¥/$ to ~157.  Equity futures pretty much doubled gains after the report with S&P futures up ~0.5% and Russell 2k futures up nearly 1% but we have pulled back from the highs. The volume of earnings since the close was very heavy but as the size of companies reporting gets smaller there is less of an impact on the broader tape. Tech is pretty well bid with semis and memory stocks rallying in the pre-market. Software is also trading higher after a couple of positive earnings reports (TEAM/NET +>15%).  
 

 

• US 2yr -8bps to 4.18%, 5yr -8bps to 4.32%, 10yr -6bps to 4.62%, 30yr -5bps to 5.18%
• USD index: -$0.44 to $99.37

 
Mixed and quiet overnight session in global markets. China trade data showed a bigger than expected trade surplus with exports increasing nearly 24% y/y ahead of the estimate of 22.2%. Imports were a touch light with crude imports rebounding 22% from June.  The Hang Seng was up 0.5% while mainland China closed up 1%. According to Bloomberg China’s Moonshot was the most recent AI model gone wild, breaking out of its test environment. In the most recent escalation of trade tension the US administration ordered new 15% tariffs and price floors on imported polysilicon used in chips and solar panels (TAN +~2.5%). In Japan the Nikkei ended a touch lower with tech remaining under pressure. The Kospi ended modestly lower with SK Hynix falling nearly 5% though Samsung ended a touch higher. European indices have been grinding higher throughout the session up between 0.5% - 1% with most indices hitting new highs.
 

 
Oil prices have been drifting a bit lower giving up some of yesterday’s gains down ~1%. US nat gas is around unchanged prices in Europe are pulling back modestly after a sharp rally yesterday. Precious metals were well bid overnight and are extending post the jobs report. Gold is up ~3% trading back over 4,400 for the first time since early June and approaching the 200d which is just under 4,500. Silver is up 6% though copper pulls back modestly after hitting a new YTD high yesterday. Ag is modestly higher. Crypto has been rallying throughout the morning despite the fact that a vote on the Clarity Act will not take place before the summer recess. The odds of passage in 2026 on Polymarket have fallen below 15%. Bitcoin is up a little more than 1% breaking above 65k.


 
Earnings:
After-Market: ABX, AFL, ALTG, AHR, AIG, AMN, AMRZ, ARLO, ARNB, ARW, AORT, AGO, BARK, BLND, CABO, CTRE, CBL, CPK, CLPR, NET, CON, ED, CVSA, DV, DOCS, EFC, ESE, XZO, FIGS, G, GMED, GSBD, GRNT, GRND, GROV, GRDN, HASI, HG, HCI, KRMN, KWY, KGS, LION, MAIN, MTW, MBI, MSDL, MP, NGVC, NNI, NRDY, NOG, OSG, OFRM, ONTO, ONL, PBR, POST, RMAX, RGA, RSG, RMD, RLJ, RKT, RHP, SVV, SI, SARO, SG, TWLO, EGY, VHI, VTEX, WEAV, WHG, XPOF, YELP
Pre-Market: AD, AMR, ASIX, ATMU, CTEV, CYD, DCH, ESNT, FLR, GLP, GTN, KRP, MBGL, OKLO, PK, PPL, SLVM, SPB, TDS, UAA, UE, VST
 
Economic Data:
US:

• Non-farm payrolls: -23k vs. 80k cons., prior revised to 20k from  57k
• Unemployment Rate: 4.1% vs. 4.2% cons., prior 4.2%
• Participation Rate: 61.4% prior 61.5%
• Average Hourly Earnings: 0.1%/3.2% vs. 0.3%/3.5% cons, prior 0.3%/3.5%
• Average Workweek:  34.3 vs. 34.3 cons., prior 34.3
• 11:00 NY Fed Survey of Consumer Expectations
• 1:00 Rig Count
• 3:00 Consumer Credit

Global:

• China Imports: 27.5% vs. 27.9% cons., prior 36%
• China Exports: 23.9% vs. 22.2% cons,. prior 27%
• Germany Industrial Production: 0.2% vs. 0.1% cons., prior 0.7%
• Germany Imports: 4.4% vs. 1% cons., prior -2.6%
• Germany exports: 0.9% vs. 0.2% cons., prior 1.1%