Good morning and Happy Friday,
 
Yesterday US equities finished lower with the S&P 500 seeing a modest 0.4% decline while small caps came under greater pressure (R2K -1.5%).  Software reversed its weakness, with several names trading sharply higher on earnings, while semis flipped to weakness, taking a step back after in the midst of a phenomenal runup over the past month. Macro pressure came from the reversal of the positive Iran signals on Wednesday, as news of Iran looking to impose conditions on transiting the Strait and divergent outlooks on Iran’s uranium stocks helped push stocks lower.   
 
This morning markets are brushing off an exchange of fire between the US and Iran in the Strait of Hormuz yesterday evening. President Trump downplayed the events, calling it “trifle” and said the ceasefire remained in effect.   
The US continues to await Iran’s response to the 14-point peace plan and Trump’s visit to China next week will hold investor’s attention.  S&P futures were trading up around 0.5% before a strong payroll print sent them to the highs of the day before pulling back to prior levels.
 

 
The April payroll data came in a lot stronger than expected (115k vs 62k). March’s strong print was revised higher but February’s sharp decline was revised even lower. Unemployment remained at 4.3% while the participation rate fell slightly from 61.9% to 61.8%. Health care, transportation and warehousing, and retail trade led the job gains (20-30k each). The Information industries saw employment edge down again. It’s been on a steady decline since COVID recovery and is now moving well-below pre-COVID levels. Deeper in the report were areas of softness that produce a more balanced, or nuanced take- especially in the Household survey: the number of employed people fell 226K.
 

 
Treasury rates moved lower despite the strong headline numbers, with the Dollar down as well.
 

• US 2yr -4bps to 2Y%, 5yr -4bps to 5Y%, 10yr -3bps to 10Y%, 30yr -2bps to 30Y%
• USD index: -$0.12 to $97.82

Crude is up modestly this morning with Brent back to ~$100. Precious metals rose after the employment numbers as rates fell, while Bitcoin is falling after the report, trading around unchanged. Ag is mostly higher.
 

 
European equites are lower. Germany’s Trade Balance was lower than expected though exports were better. Industrial production came in weaker than expected and further declined from last month. In Japan the Nikkei closed slightly lower (-0.2%), following Thursday’s 5% jump after the market was closed for most of the week. The yen was relatively quiet, trading in its tightest range since interventions began last week, which reports are pinning at around $30B. SoftBank is in talks with Nvidia to build AI servers in Japan. Over in China Shanghai was flat while Hang Seng fell ~1%, putting weekly gains at around 2% for both. Focus now shifts to President Trump’s visit to China next week.    
 

 
Earnings:
After-Market (Thrs): ABNB, AFRM, AKAM, COIN, CRWV, DBX, DXC, DKNG, EXPE, FBIN, G, GILD, GMED, HUBS, MCHP, MCK, MP, MSI, NET, RGA, RKT, RMAX, RNG, RSG, STRZ, TOST, TTD, XYZ
Pre-Market: AMCX, AMR, ASIX, BAM, EMBJ, ESNT, FIS, FLR, OSK, PPL, STWD, WEN
 
Economic Data:
US:

• Payrolls: 115k vs 62k cons, prior 185k
  • Unemployment rate: 4.3% vs 4.3% cons, prior 4.3%
• 10:00am Univ Mich Consumer Sentiment
• 10:00am Inventories
• 11:05am / 2:20pm Fed Goolsbee
• 1:00pm Rig Count      

Global:

• Germany Trade Balance: €14.3B vs €18.4B cons, prior €19.6B
  • Exports m.m: 0.5% vs -1.7% cons, prior 3.6%
• Germany Industrial Production m.m: -0.7% vs 0.5% cons, prior -0.5%