Soft NFP data has significantly changed the macroeconomic framework

The macroeconomic landscape has shifted notably following the release of soft non-farm payroll (NFP) figures. Global markets have returned to a state of volatility after the disappointing U.S. NFP data, a trend that may persist for some time. In June, the U.S. economy added just 57,000 nonfarm payroll jobs, significantly below the anticipated 114,000. Despite this, the unemployment rate fell to 4.2%, driven by a decline in labor force participation to 61.5%, a five-year low. Meanwhile, average hourly earnings increased by 3.5% year-over-year amid inflation near 4.2%.

Bulls are holding ground on the last trading day of the week

Following the weak NFP report, gold prices rebounded near $4,200, Bitcoin surged above $62,000, GBP/USD reached a fresh two-week high, and the Dow Jones Industrial Average hit a record high. This rare market dynamic reflects a convergence where major asset classes are simultaneously responding to a common catalyst. Conversely, the U.S. Dollar Index (DXY) experienced significant selling pressure on Thursday in reaction to the jobs data.

The weaker-than-expected U.S. jobs report has dampened expectations of an additional Federal Reserve rate hike, with Fed funds futures now implying approximately a 50% chance of a September increase, down from 67% before the report. This bullish market sentiment is further bolstered by comments from Fed Chair Kevin Warsh, who indicated that inflation expectations have moderated, diminishing the urgency for aggressive rate hikes. Additional market support came from increased oil shipments through the Strait of Hormuz and encouraging progress in indirect U.S.-Iran negotiations.

Looking ahead, the upcoming trading sessions will be pivotal as investors and traders shift their focus to next week’s Federal Open Market Committee (FOMC) meeting minutes and Fed commentary. At the same time, markets are closely monitoring developments related to the proposed U.S.-Iran peace agreement. Negotiators have concluded discussions in Qatar, with both sides reporting “positive progress.” The next round of talks is set for July 18.

 

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