June Jobs Preview And How To Trade It: "Markets Want Something Weaker Than Consensus"

The US jobs report for June will be released on Thursday, 2nd July, at 8:30 EDT, rather than the typical Friday, on account of
the US Independence Day market holiday on 3rd July.

Summary: The US jobs data is expected to show 113k nonfarm payrolls added to the US economy in June, slowing from Mayʼs 172k; the unemployment rate is seen unchanged at 4.3%, as Newsquawk summarizes in their preview wrap. Average hourly earnings are expected to rise 0.3% M/M, matching the prior rate. Analysts note that May was flattered by local government hiring which is not expected to be repeated, however, the FIFA World Cup could add around 40k temporary jobs to Juneʼs headline. Labor market proxies point to some cooling in the month: weekly claims have edged higher, with analysts suggesting that the trend is consistent with payroll growth slowing below breakeven ahead; S&P Globalʼs PMI data showed employment falling again, while the Conference Board data showed consumersʼ assessment of job availability weakening. For the Fed, the labor market still appears steady enough to keep officials focused on inflation rather than on employment risks, particularly after new Chair Kevin Warsh emphasized the 2% inflation target; a firm payrolls print and stable jobless rate would likely support another hold in July.

Expectations:

• Consensus looks for 113k nonfarm payrolls to be added to the economy in June (vs 172k in May; vs three month average of 188k, six-month average of 92k, and 12-month average of 42k).
  • Goldman estimates payrolls rose by 130k in June, above consensus of +115k but below the three-month average of +188k. Private payrolls are expected to increase by 95k, below consensus of 115k.
• The dispersion of estimates is especially wide this month, from 200K on the high end according to Bloomberg economics, down to 25K on the low end according to Citi.

• The May data saw an outsized lift from local government hiring, and analysts do not expect that to be repeated in June. With the FIFA World Cup running from 11th June through 19th July, Goldman Sachs has estimated that the sporting event, hosted in the US (and Canada and Mexico), will add 40k jobs to the headline figure, with effects likely to reverse in the proceeding months (see more below).
• The unemployment rate is seen unchanged at 4.3% in June;  the Chicago Fedʼs real-time unemployment rate forecast is at 4.33%, reflecting a small increase in layoffs, and a small decrease in hiring.
  • The FOMCʼs most recent economic projections in June forecast the jobless rate will remain at 4.3% this year and next, tilting down to 4.2% in 2028 and in the longer-run. Average hourly earnings are likely to rise by +0.3% M/M in June, matching the prior rate.

Driving the Data: Analysts at Barclays are below consensus on headline payrolls, and forecast 100k in June, slowing sharply from Mayʼs 172k and the firmer prints in March and April. The bank says that barring any revisions, that would still lift the Q2 three month average to around 150k/month, well above Q1ʼs 73k pace. The bank agrees that forecast dispersion is unusually wide, noting that claims-based models point to robust gains, while approaches weighted toward alternative indicators and resilient ADP data suggest a milder turnout.

Labor Market Proxies: Initial jobless claims for the week that coincides with the BLS survey window saw 227k initial jobless claims, up vs the 210k into the May jobs data. Continuing claims were at 1.821mln from 1.785mln. However, analysts say that the data in that week was likely distorted by Juneteenth, as seasonal factors have not yet fully adjusted for the holidayʼs effect. Looking through the noise, Pantheon Macroeconomics says initial and continuing claims have trended higher since early May, consistent with payroll growth slowing below the breakeven pace. ADP's gauge of national employment printed 98k in June (exp. 118k, prev. 122k); the pay metrics for job stayers was unchanged at 4.4% Y/Y, while for job changers, ticked up to 6.6% Y/Y (prev. 6.5%). ADP's chief economist said the hiring picture showed a dual supply-demand narrative, where the time to find a job was lengthening, and some sectors are facing labor constraints; the net effect is a slowdown in job creation. Revelio's public labor statistics for June printed 258.8k jobs (prev. 123.7k, rev. 110.8k); it said that the gain was driven by significant job gains in the Public Administration, Health Care and Social Assistance, and Professional and Business Services sectors.

Arguing for a stronger report:

• World Cup hiring. Data from Homebase suggests that employment grew more quickly in World Cup host cities between the May and June survey weeks. Goldman's historical analysis suggests that the World Cup could boost payroll growth by 40k in June, and that its impact should be concentrated in the leisure and hospitality, professional and business services, and trade and transportation sectors.

• June first-print bias. Nonfarm payrolls exhibit a clear tendency toward strong June first prints, which appears to reflect a recurring seasonal outperformance of the first vintage relative to the final vintage. This can happen because the final vintages are used to calculate the seasonal factors, which are consequently not guaranteed to be appropriate for the initial vintages. As charted below, the initial June reading has surprised to the upside and been revised lower in 11 of the last 13 years. The bias has become particularly pronounced in state and local government educational services payrolls: over the last three years, the category has been revised down by an average of 45k between the first and third releases after accelerating sharply vs. May.

Strikes. The BLS strike report indicates that the end of worker strikes will provide a 4k boost to June payrolls.

Arguing for a weaker report:

• Government hiring. Outside of the increase in state and local government educational services described above, Goldman expects a 10k decline in government payrolls. The bank also expects the ongoing federal government hiring freeze to continue to weigh on federal government payrolls.

Mixed/neutral factors:

• Big data. The alternative measures of employment growth we track were roughly in line with their prior month’s pace: the alternative indicators tracked by Goldman averaged +79k, compared to +69k in May. That said, these indicators will not be affected by the first print bias discussed above that are expected to boost nonfarm payrolls in this month’s report.

• Layoffs. Initial jobless claims increased to 223k on average in the June payroll month, up from 203k on average in May. The JOLTS layoff rate edged up by 0.1pp to 1.1% in May. Announced layoffs reported by Challenger, Gray & Christmas declined by 51k to 46k in June (NSA).
• Job availability. Averaging across the measures of job openings from JOLTS, Indeed, and LinkUp, job openings were roughly unchanged in May, and the measures from Indeed and LinkUp were stable in June. The Conference Board labor differential—the difference between the percentage of respondents saying jobs are plentiful and those saying jobs are hard to get—declined 2.6pt to +2.4 in June.

• Employer surveys. The employment components of both Goldman's manufacturing (+1.3pt to 50.6) and services (+0.3pt to 48.9) survey trackers increased in June. However, the signal from survey data has been less useful - and at times misleading -during the post-pandemic period and thus has little bearing on our payrolls forecast.

Business Surveys: The June S&P Global flash PMI signaled softer labor market conditions, despite firmer output growth and points to cautious hiring and downside risk to payroll growth, analysts said. The survey compiler notes that employment fell for a second consecutive month, and for the third time in four months, as firms focused on cost reduction amid high input prices and concerns over the outlook. The weakness was concentrated in manufacturing, where headcounts were cut at the fastest rate since the early-2020 COVID lockdowns; ex the pandemic, factory job cuts were described as the sharpest since 2009. Services employment fell only modestly.

Consumer Confidence: The Conference Boardʼs June consumer confidence data also pointed to some cooling in labor market perceptions, and suggests more of a softer current labor market backdrop, rather than any sharp deterioration in expectations. Consumersʼ assessment of the current labor market softened measurably, with the share saying jobs were ‘hard to getʼ rising to 22.5 (from 19.8), the highest since January 2021. The labor market differential (jobs ‘plentifulʼ minus jobs ‘hard to getʼ) fell 2.6 points to +2.4, indicating a weakening of current employment conditions. Meanwhile, forward-looking labor market expectations were little changed: fewer consumers expected more jobs to be available, but fewer also expected job losses.

Fed Policy: Speaking at his first post-meeting press conference as Fed Chair on 17th June, Kevin Warsh said officials judged the labor market as looking steady, if not improving somewhat, noting that “the jobs data has been moving in a good direction,” with some committee members seeing trends as even more favorable than the headline figures suggest. The updated economic projections (which Warsh did not contribute to) trimmed the year-end unemployment view to 4.3% (from 4.4%). Analysts have recently characterized the labor market as resilient, but not inflationary, giving policymakers room to hold rates rather than ease further. Analysts also continue to note that the Fedʼs policy focus seems to be on the inflation side of its mandate. Warsh placed great emphasis on the 2% inflation target, and made it clear that taming inflation was a key focal point for his leadership amid the energy-driven price increases, caused by the Iran conflict, and the steady jobs market has allowed the central bank to prioritize the fight against inflation. Barclays writes that a payrolls print well above the breakeven pace (the St Louis Fed has estimated this to be around 15-18k/month), set against a jobless rate that is barely moving, keeps a familiar wedge between the household an establishment surveys intact, adding that that combination looks consistent with another Fed hold in July, with policymakers continuing to weigh the case for tightening. Money markets currently price in 20bps of hikes by September, implying an 80% probability of a 25bps hike, while a 25bp hike is fully priced by October.

Market Reaction: 

JPM Market Intel: 

With period-end rebalancing appearing to be completed, JPM is looking for the bullish trend to resume. Dip-buying behavior remains prevalent, which is why the outcomes here skew bullishly, especially when considering neutral aggregate positioning. When considering macro fundamentals, Feroli’s estimate reflects a resilient economy, and our latest Consumer Cash Pile (here) reflects ample levels of cash across the income brackets that drive the majority of US consumption with minimal signs of aggregate consumer stress. Combine that with a likely robust 26Q2 earnings season and that should drive stocks higher, ceteris paribus. For 26Q2 earnings season, FactSet expectations are for revenue growth of 12.1% (vs. 11.9% in 26Q1), earnings growth of 22.0% (vs. 28.8% in 26Q1), with 14.1% margins (vs. 14.8% in 26Q1, which was the second consecutive record).

Here is JPM's scenario analysis for the post-NFP market reaction: 

• NFP prints above 160k. SPX loses 50bp to gains 1.5%: odds 5%
• NFP prints between 130k –160k. SPX gains 75bp – 1.25%: odds 25%
• NFP prints between 100k – 130k. SSPX gains 50bp – 1%: odds 40%
• NFP prints between 70k – 100k. SPX loses 50bp – 1.25%: odds 25%
• NFP prints below 70k. SPX loses 1.25% – 2%: odds 5%

What are options pricing: For options expiring on July 2, 2026, using data from June 29, show a 1.2% implied move.

Goldman:

The first Payrolls of the ‘new Warsh Fed’: Goldman's Adam Crook has collected various views from around the trading desk, and writes what is enough to put a July-hike in play, what are you watching + how could markets react to different outcomes?

Bottom Line:  A critical few days, with Warsh’s speech in Sintra + Payrolls on Thursday, as the market scrambles to understand the reaction-function of the new Warsh-Fed, and the strategy + time horizon over which the Committee wants to pursue price-stability. There is clearly a focus on the Labor market, explicitly referenced in the Press Conference, and there are arguments (amongst clients + also no doubt on the committee) for both waiting + looking through the AI-driven inflation + investment boost, and also for to raising rates to cool parts of the economy + to provide more “prudent” risk management.  

Below we summarize the views of many of Goldman's top traders.

• Michael Cahill (Head of G10 FX Strategy): The unemployment rate matters most, not headline payrolls. Recent prints have shown strong headline numbers against a more stable household survey, so signs the unemployment rate is also moving lower would stoke "heating up" concerns and put July in focus. He sees the deeper debate as being about the neutral rate and how AI affects it. His net view: hikes will take longer to come out of pricing than to go in, which skews risk toward dollar appreciation on a strong report.
• Brandon Brown (US Government Bond Trading) — Roughly 8bp is priced for July. Strong payrolls above 100k with unemployment at 4.3% or lower takes July toward 50/50 into mid-month CPI; a weak report with rising unemployment plus lower commodities lets pricing drift back toward no move. His key structural point: until the Fed actively chooses not to hike, it's hard to price less than one hike since cuts carry essentially no weight in the distribution — and a July hike delivered without forward guidance would leave the market unable to gauge how many more follow, meaning the belly likely cheapens.
• Brian Bingham (STIR Trading): Calls June a "seismic shift" from the FOMC; the burden of proof for a July hike is low given Warsh's resolute inflation comments. CPI is the ultimate determinant, but headline NFP above 150k (already elevated given World Cup sequencing effects) or an unrounded downtick to 4.2% unemployment takes July from 8bp to a coin flip. Since lack of forward guidance floors pricing around 5bp, he sees July as the most asymmetric pay into Thursday — though he notes front-end positioning is already quite short, and he's watching whether Warsh suggests falling oil/breakevens buy the Fed patience.
• Alan Stewart (Head of EMEA EM / G10 Spot Trading): With a less communicative Fed, the market will over-react to outliers in either direction. Post-FOMC dollar length exists but conviction is weak (poor entry). The whisper on NFP is already elevated, so 110–140k doesn't break DXY 101.80; above 150k is destructive for high-yielding EMFX, with USDZAR, USDBRL, and USDMXN breaking last week's highs and another ~1% of dollar strength. Sub-100k, especially with downward revisions, neutralizes dollar bullishness and restarts EMFX inflows.
• Kristian Brauten-Smith (G10 FX Spot):  A 120k+ print with supportive revisions brings incremental dollar buying, mainly from real money into the long weekend; systematic/model demand only kicks in below ~1.1325 EURUSD. USDCHF has the heaviest long-dollar positioning on a liquidity-adjusted basis, making it the most vulnerable pair on a miss. USDJPY is being used as a book balancer given intervention asymmetry at 40-year extremes. If Sintra and NFP point the same direction, he warns of a 1.5–2% dollar move.
• Brian Dunne (G10 FX Options):  ~40bp breakeven for USD-G10 over NFP is cheap given data should be increasingly market-moving without forward guidance (35–50bp is the one-year range). Best gamma to own: USDCHF, then EURUSD. Specific trades: Thursday USDCHF 0.8125 calls at 13.5bp and EURUSD 1.1325 puts at 7bp; further out, 1m USDSEK 25d calls and 1m USDCAD 10d calls, with the 1m tenor now catching NFP, CPI, and the July FOMC.
• Jonas Schmitten (FX Market Strats): Historical framing: June NFP prints tend to surprise to the upside, Thursday payrolls are rare (last ones were July 2020 and July 2025), and SEK and NOK have historically been the most reactive currencies to the release.
• Keith Dell (EM Rates Trading): Consensus remains constructive on EM: a measured July hike anchors long-end yields and flattens curves, so an in-line or soft print keeps engagement appetite high, helped by lower oil. The risk is a 200k+ blowout that revives the DXY bid and challenges hopes for less restrictive local policy. CTA and momentum flows favor lower yields even though positioning looks stretched.
• Rich Privorotsky (Head of European One Delta): Equities marginally want something weaker than consensus: with no forward guidance, hot NFP means hikes in play, which is unfriendly for pockets of equity risk. Goldilocks is slightly soft-of or in-line; around +175k with unemployment flat-to-down risks "indigestion." But he stresses the real equity story is the AI spending economy — modestly higher rates would be more rotational (against bond proxies and defensives) than broadly damaging.

More in the full JPMorgan (here) and Goldman notes (here and here) available to pro subs.