02.07.2026 - Mixed Labor data

The latest US labour market report delivered mixed signals.

The US economy added 57’000 jobs in June, well below expectations of 115’000 and down from the revised 129’000 jobs created in May. Despite the weaker hiring, the unemployment rate declined to 4.2%, highlighting that the labour market remains relatively resilient.

Markets:

• Equities: European markets moved markedly higher, while US equity futures also advanced following the release, although gains remained more moderate than in Europe

• Bonds: Treasury yields declined after the report, with the US 10-year yield easing to 4.48%.

• Commodities: Precious metals rallied. Gold climbed to around USD 4’150 and silver towards USD 62 - oil trading little changed: WTI USD 68 and Brent USD 71/barrell

• Currency: The US dollar weakened against most major currencies

• Cryptos: recovered with Bitcoin climbing back to almost USD 62k

• Volatility: remains low - falling below 16

My View: The latest employment report paints a mixed picture, however suggests labor market to continue being resilient. While hiring is clearly slowing, there are still no signs of a meaningful deterioration, that would force the Federal Reserve to change its stance.

As highlighted by Fed Chair Kevin Warsh yesterday, the Federal Reserve's primary concern remains inflation, not employment. As long as the labour market stays healthy enough, the Fed has room to keep monetary policy restrictive.

I therefore continue to expect higher interest rates for longer, with another rate hike remaining a realistic scenario. Markets are increasingly pricing the next potential hike for September. A move in July is not unlikely, however markets do not price this in.
Overall, equity investors remain too optimistic, expecting the Fed to continue supporting financial markets.

As I have stated repeatedly over recent weeks, I believe the Fed risks falling behind the curve if inflation continues spreading into second- and third-round effects.

For now, markets continue to move sideways near record highs as bulls and bears battle for direction. Next week's earnings season should provide a much clearer picture of corporate fundamentals and whether the earlier spike in energy prices during the Middle East conflict has started to impact company results and profit margins.

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