US stocks gained and the dollar strengthened after US jobs data topped forecasts ahead of Independence Day - Newsquawk Asia-Pac Market Open

• US stocks gained and the dollar strengthened, while Treasuries and gold sold off in the wake of strong jobs data in which Non-Farm Payrolls topped forecast and the Unemployment Rate unexpectedly declined, while wages metrics cooled and Jobless Claims also declined. The data releases continued to push out the narrative of a need for a Fed rate cut, especially in July, with Refinitiv money market pricing now seeing 51bps of cuts by year-end (vs. 66bps pre-data) and a 4% chance of a 25bps cut in July (vs. 25% pre-data).
• USD strengthened following the stronger-than-expected US jobs data which resulted in an unwinding of Fed rate cut bets, while there was also a breakthough in Congress where the House voted to pass President Trump's sweeping tax cut and spending bill ahead of the Independence Day holiday with President Trump set to sign the bill into law on Friday.
• Looking ahead, highlights include South Korean Current Account, Japanese Household Spending, Philippines CPI & Singapore Retail Sales, Supply from Australia, US markets are closed on Friday for Independence Day.

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LOOKING AHEAD

• Highlights include South Korean Current Account, Japanese Household Spending, Philippines CPI & Singapore Retail Sales, Supply from Australia, US markets are closed on Friday for Independence Day.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks gained and the dollar strengthened, while Treasuries and gold sold off in the wake of strong jobs data in which Non-Farm Payrolls topped forecast and the Unemployment Rate unexpectedly declined, while wages metrics cooled and Jobless Claims also declined. The data releases continued to push out the narrative of a need for a Fed rate cut, especially in July, with Refinitiv money market pricing now seeing 51bps of cuts by year-end (vs. 66bps pre-data) and a 4% chance of a 25bps cut in July (vs. 25% pre-data).
• SPX +0.83% at 6,279, NDX +0.99% at 22,867, DJI +0.77% at 44,829, RUT +1.02% at 2,249.
• Click here for a detailed summary.

TARIFFS/TRADE

• US Treasury Secretary Bessent said he is meeting with European Union negotiators and warned countries not to drag out trade talks as tariffs can go back to the April 2nd levels. Bessent also commented that Vietnam tariffs are not stacked upon the 10% baseline, so the tariffs on Vietnam are a flat 20% and the Vietnam deal is finalised in principle. Furthermore, he said countries should be careful regarding the July 9th trade deadline and that rates could boomerang back to the April 2nd rate, while he added they will see what they can do with the EU.
• US Treasury Secretary Bessent said to expect a flurry of trade deals before July 9th and expect to see about 100 countries get a minimum 10% reciprocal tariff, while he added they are going to be announcing several deals.
• European Commission President von der Leyen said they are ready for a deal with the US on tariffs and are prepared if there is no deal, while she noted the goal in US trade talks is to reach an agreement in principle.
• China's Foreign Minister Wang Yi said China is shortening rare earth export approvals for European companies.
• China's MOFCOM said the investigative body will make a decision in the near future regarding the EU brandy anti-dumping probe.
• India may allow genetically-modified animal-feed imports from the US in a trade deal, according to Bloomberg.

NOTABLE HEADLINES

• US House voted 218-214 to pass President Trump’s sweeping tax cut and spending bill, sending it to President Trump to sign into law, while the White House said Trump will sign the bill on Friday at 17:00EDT/20:00BST.
• US Treasury Secretary Bessent said there could be an increase in US financing needs based on yields and it is likely that they will use bills to refill the Treasury General Account, while he added that they will see US banks take up more of the debt issuance and debt-to-GDP is to be well into the 90% range by the end of President Trump’s term.
• Fed's Bostic (2027 voter) said US government debt at some point will have implications in the marketplace and crowd out other investments. Bostic added it will have implications for the efficacy of monetary policy and making interest rates more independent of the central bank.
• WSJ's Timiraos said the "June jobs report does little to reconcile a hazy outlook for Fed cuts besides very likely torpedoing whatever chance there was of a July cut, particularly if stocks continue to push to new highs."

DATA RECAP

• US Non-Farm Payrolls (Jun) 147.0k vs. Exp. 110.0k (Prev. 139.0k, Rev. 144k); two-month net revisions: +16k (prev. -95k)
• US Unemployment Rate (Jun) 4.1% vs. Exp. 4.3% (Prev. 4.2%)
• US Average Earnings YY (Jun) 3.7% vs. Exp. 3.9% (Prev. 3.9%, Rev. 3.8%)
• US Initial Jobless Claims w/e 233.0k vs. Exp. 240.0k (Prev. 236.0k, Rev. 237k)
• US Continued Jobless Claims w/e 1.964M vs. Exp. 1.956M (Prev. 1.974M, Rev. 1.964M)
• US International Trade (USD)(May) -71.5B vs. Exp. -71.0B (Prev. -61.6B, Rev. -60.3B)
• US S&P Global Services PMI Final (Jun) 52.9 (Prev. 53.1)
• US S&P Global Composite PMI Final (Jun) 52.9 (Prev. 52.8)
• US ISM Non-Manufacturing PMI (Jun) 50.8 vs. Exp. 50.5 (Prev. 49.9)
• US Factory Orders MM (May) 8.2% vs. Exp. 8.2% (Prev. -3.7%, Rev. -3.9%)

FX

• USD strengthened following the stronger-than-expected US jobs data which resulted in an unwinding of Fed rate cut bets, while there was also a breakthough in Congress where the House voted to pass President Trump's sweeping tax cut and spending bill ahead of the Independence Day holiday with President Trump set to sign the bill into law on Friday.
• EUR gave way to the dollar strength and with the single currency not helped by mixed Services PMI data, while the latest ECB Minutes noted that keeping interest rates at their current levels could increase the risk of undershooting the inflation target in 2026 and 2027.
• GBP ultimately held its ground after UK PM Starmer's attempts to instil confidence in Chancellor Reeves.
• JPY was pressured and USD/JPY briefly breached the 145.00 level to the upside amid the strong US jobs data and positive risk tone.

FIXED INCOME

• T-notes tumbled after a hot NFP report saw traders unwind rate cut bets.

COMMODITIES

• Oil prices marginally declined with lows seen amid reports that the US and Iran are to resume nuclear talks.
• OPEC+ delegates are discussing a 411k BPD output hike for August, according to Bloomberg.

GEOPOLITICAL

MIDDLE EAST

• Israel's Channel 12 reported that a sixth round of US-Iranian negotiations is expected to be held in Oslo next week, according to Sky News Arabia. It was later reported that US White House envoy Witkoff is set to meet with Iran's Foreign Minister Araghchi in Oslo next week to restart nuclear talks, according to Axios citing sources.
• Iran's Foreign Ministry said Iran remains committed to the NPT and its safeguards agreement, while it added that cooperation with the IAEA will be channelled through the national security council for safety and security reasons. It was separately reported that Iran’s Foreign Ministry told Sky News there is still a chance for peace talks with the US.
• Iran's Deputy Foreign Minister said they are not planning to stop enrichment and will not retaliate further against the US, while they are prepared to discuss the enrichment programme with others.
• Hamas sources told Asharq newspaper that Hamas was inclined to accept the proposal for a 60-day ceasefire and said that Hamas was expected to respond "positively" tonight or tomorrow morning. It was separately reported that mediators moved closer to securing an Israel-Hamas ceasefire in Gaza, according to FT.
• An explosive drone was intercepted near Erbil airport in northern Iraq, according to a Kurdistan security service statement.

RUSSIA-UKRAINE

• Kremin aide Ushakov said Russian President Putin and US President Trump spoke for nearly an hour and Putin told Trump that Russia will not step back from its goals in Ukraine, while they had a detailed discussion on Iran and the Middle East. Furthermore, Putin emphasised the importance of settling the Iran issue exclusively by diplomatic means and Trump again raised the issue of bringing the Ukraine conflict to a swift halt.
• US President Trump and Ukrainian President Zelensky are expected to discuss the halt of arms deliveries to Ukraine in a call on Friday, according to the FT.

ASIA-PAC

NOTABLE HEADLINES

• Senior CCP official said on US-China relations that setting up barriers and thresholds will eventually harm both and the US should recognise how much it has to gain from US-China cooperation.
• US lifted the licence suspension for GE Aerospace to allow the sales of jet engines to China's COMAC.
• Japanese trade union Rengo said final data showed an average wage hike of 5.25% for fiscal 2025 (prev. 5.10% hike in 2024).
• Reuters poll showed 19 out of 27 economists expect the RBNZ to keep the OCR unchanged at 3.25% during next week’s meeting, while 16 out of 22 economists expect the OCR to be reduced to 3.00% in Q3 and the year-end median forecast for the OCR is at 3.00% (prev. 2.75% view in May poll).

EU/UK

NOTABLE HEADLINES

• UK Chancellor Reeves said she was clearly upset yesterday and that it was a personal issue but won't go into details, while she added today is a new day and is getting on with the job, while she is proud of what they've done in the last year and there's more to be done.
• ECB Minutes stated that a few members saw a case for keeping interest rates at their current levels and it was also contended that interest rates could already be in accommodative territory. Minutes also noted that the proposed reduction in policy rates should be seen as aiming to protect the “on target” 2% projection for 2027 and keeping interest rates at their current levels could increase the risk of undershooting the inflation target in 2026 and 2027. Furthermore, it stated that the risk of a sustained undershooting of the inflation target was seen as limited unless there was a sharp deterioration in labour market conditions.
• ECB's Wunsch said the inflation risk is more downward than upward, according to Handelsblatt.
• EU reportedly plans to propose a new joint debt instrument to tap capital markets in times of crisis, although EU countries would still need to authorise its use and the proposal is at draft stages, while Germany Sweden and the Netherlands have long been against joint EU debt, according to FT.

DATA RECAP

• UK S&P Global Services PMI (Jun) 52.8 vs. Exp. 51.3 (Prev. 51.3)
• UK S&P Global PMI Composite PMI (Jun) 52.0 vs. Exp. 50.7 (Prev. 50.7)
• German HCOB Services PMI (Jun) 49.7 vs. Exp. 49.4 (Prev. 49.4)
• German HCOB Composite PMI (Jun) 50.4 vs. Exp. 50.4 (Prev. 50.4)
• French HCOB Services PMI (Jun) 49.6 vs. Exp. 48.7 (Prev. 48.7)
• French HCOB Composite PMI (Jun) 49.2 vs. Exp. 48.5 (Prev. 48.5)
• Italian HCOB Services PMI (Jun) 52.1 vs. Exp. 52.7 (Prev. 53.2)
• Italian HCOB Composite PMI (Jun) 51.1 vs. Exp. 52 (Prev. 52.5)
• EU HCOB Services Final PMI (Jun) 50.5 vs. Exp. 50.0 (Prev. 50)
• EU HCOB Composite PMI (Jun) 50.6 vs. Exp. 50.2 (Prev. 50.2)