Today's Update 07-03-2025
Key Points and Metrics
Key Points and Metrics:
US Nonfarm Payrolls (June)
Actual: +147,000
Forecast: +106,000
Previous: +139,000 (Revised to +144,000)
Summary: Job growth exceeded expectations, indicating continued strength in the US labor market.
US Unemployment Rate (June)
Actual: 4.1%
Forecast: 4.3%
Previous: 4.2%
Summary: Unemployment rate decreased more than expected, suggesting a tightening labor market.
US Average Earnings Year-over-Year (YoY) (June)
Actual: +3.7%
Forecast: +3.8%
Previous: +3.9% (Revised to +3.8%)
Summary: Wage growth slowed slightly, coming in below expectations.
US Average Earnings Month-over-Month (MoM) (June)
Actual: +0.2%
Forecast: +0.3%
Previous: +0.4%
Summary: Monthly wage gains decelerated, indicating a potential easing of wage pressures.
US Private Payrolls (June)
Actual: +74,000
Forecast: +100,000
Previous: +140,000 (Revised to +141,000)
Summary: Private sector job growth slowed and missed forecasts.
US Government Payrolls (June)
Actual: +73,000
Previous: -1,000
Summary: Significant increase in government employment contributed to overall payroll gains.
US Manufacturing Payrolls (June)
Actual: 7,000
Forecast: -2,000
Previous: -8,000
Summary: Manufacturing sector continued to lose jobs, more than anticipated.
US Average Workweek Hours (June)
Actual: 34.2 hours
Forecast: 34.3 hours
Previous: 34.3 hours
Summary: A slight decline in average weekly hours worked.
US Labor Force Participation Rate (June)
Actual: 62.3%
Forecast: 62.4%
Previous: 62.4%
Summary: Participation rate edged down, indicating fewer people in the labor force.
US Initial Jobless Claims
Actual: 233,000
Forecast: 240,500
Previous: 236,000 (Revised to 237,000)
Summary: Fewer people filed for unemployment benefits than expected, a positive sign for the job market.
US Continued Jobless Claims
Actual: 1.964 million
Forecast: 1.962 million
Previous: 1.974 million (Revised to 1.964 million)
Summary: Continued claims decreased slightly, in line with forecasts.
US Trade Balance (May)
Actual: $71.5 billion
Forecast: - $71 billion
Previous: - $61.6 billion (Revised to - $60.3 billion)
Summary: Trade deficit widened more than expected, indicating increased imports or decreased exports.
Swiss Consumer Price Index (CPI) YoY (June)
Actual: +0.1%
Forecast: -0.1%
Previous: -0.1%
Summary: Inflation in Switzerland turned positive, exceeding expectations.
European Central Bank (ECB) Meeting Minutes
Key Insights:
Some members saw a case for keeping interest rates unchanged.
Concerns that elevated uncertainty could weaken the effectiveness of monetary policy.
Noted the resilience of Euro-area bond markets.
Market Reactions and Additional Information:
Market Movements After 8:30 AM ET Data Releases:
US Dollar, Bond Yields, and US Index Futures strengthened following the stronger-than-expected Nonfarm Payrolls report.
Rate Futures:
Traders reduced bets on a July Federal Reserve rate cut.
Now pricing about an 80% chance of a Fed rate cut by September, down from 98% before the jobs report.
Comments from US Treasury Secretary Bessent:
Anticipates US economic growth could exceed 3%.
Expressed desire for the Federal Reserve to "right-size" their budget.
Emphasized readiness to reach a deal with the European Union on tariffs.
Geopolitical & Policy Updates
Trade Tensions:
EC President von der Leyen: "All instruments on the table" if no US deal reached
Treasury Secretary Bessent meeting with EU negotiator today
China warns it will "strike back if needed" regarding US-Vietnam trade deal
Central Bank Commentary:
ECB accounts revealed some members wanted to keep rates flat
BoJ's Takata expects no severe US recession but monitoring tariff impacts
Market Structure Notes
Early Close: Markets close at 1:00 PM ET today for July 4th holiday
Upcoming Earnings: Major banks report July 15th (JPM, WFC, C, BLK)
Fed Independence Concerns: 65% of central bank reserve managers see Fed independence at risk
Final Thoughts
Today's jobs report delivered a Goldilocks scenario - strong enough to show economic resilience but not so hot as to reignite inflation fears. The 147k payroll gain beat expectations while wage growth cooled to 3.7%, giving the Fed breathing room. However, the private sector weakness (74k vs 100k expected) suggests the labor market is genuinely softening, not just normalizing.
The immediate market reaction tells the story: traders quickly abandoned July rate cut bets, but September remains very much in play at 80% odds. This data supports the Fed's patient approach while keeping a September cut on the table if economic conditions warrant it.
With markets closing early today and the holiday weekend ahead, expect lighter volume and potentially more volatile moves on any news. The real test will be how this employment data influences the Fed's thinking when combined with upcoming inflation prints and any escalation in trade tensions with Europe.
Keep your powder dry and enjoy the long weekend!
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always do your own research and consider your financial situation before making investment decisions.
Like and share. It helps the publication to continue to grow.
Remember what goes up must come down (eventually)
Stay safe and invest wisely and this is in no mean financial advice. [Full Disclaimer]Thank you for supporting this newsletter. It will keep improving.
Harry