Markets Juggle Strong U.S. Jobs Data (9 -13 June)

The US dollar index rose over 0.4% to above 99.1 on Friday after May’s jobs report showed 139,000 new jobs, beating expectations of 126,000. Wages also grew faster than expected, though a downward revision to April’s figures limited optimism. Despite Friday's gains, the dollar is still headed for a small weekly loss due to broader economic slowdown concerns and Fed uncertainty. The euro dropped below $1.14 after the ECB’s 25bps rate cut and downgraded inflation forecasts. President Lagarde suggested the easing cycle may be near its end, while ECB’s Stournaras said the eurozone likely achieved a “soft landing.” The British pound climbed to $1.355, nearing a three-year high, backed by strong UK data and a new £15 billion defense plan under AUKUS. The yen weakened toward 144 as traders processed weak Japanese spending figures and awaited the US jobs report. BOJ Governor Ueda reiterated a possible rate hike if economic forecasts are met.

Gold slipped below $3,350 per ounce Friday after better US jobs data reduced labor market concerns. The US added 139,000 jobs in May, with wages up 3.9% and unemployment steady at 4.2%. Despite the pullback, gold remains up about 2% this week, supported by trade tensions and recent US tariffs on steel and aluminum. WTI crude climbed past $64, on track for a 6% weekly gain, helped by strong US job data, easing US-China tensions, Canadian wildfire disruptions, and Saudi calls for an OPEC+ output hike in August. Silver surged above $36, the highest since 2012, driven by supply deficits, industrial demand, and safe-haven flows. The Silver Institute expects the current deficit to shrink by 21% in 2025.

US 10-year Treasury yields jumped nearly 7 basis points to 4.45% after Friday’s jobs report showed a resilient labor market. May added 137,000 jobs, slightly above forecasts, while the unemployment rate stayed at 4.2% and wages grew 0.4%. The data supports the Fed’s cautious stance, with the probability of a September rate cut dropping to 75%. While inflation concerns persist, the report eased immediate expectations for policy easing. Geopolitical focus remains on US-China trade relations, with a Trump–Xi call signaling renewed dialogue. In Europe, German 10-year Bund yields hovered just under 2.6% following the ECB rate cut. Japan’s 10-year bond yield closed the week near 1.47%, reflecting a stable domestic outlook.

ISM Manufacturing PMI (May)

The US ISM Manufacturing PMI dropped to 48.5 in May from 48.7 in April, falling short of the 49.5 forecast. This marks the third straight month of contraction and the sharpest decline since November 2024, reflecting rising economic uncertainty and ongoing cost pressures. Output, new orders, employment, and order backlogs all declined, though less sharply. Export sales saw a steeper drop. Inventories moved back into contraction after previous gains from early tariff purchases, and supplier deliveries remained slow due to port bottlenecks. Price increases, though slightly slower, stayed high.

Eurozone CPI (YoY, May)

Inflation in the eurozone slowed to 1.9% in May from 2.2% in April, below the 2.0% estimate. This is the first time since September 2024 that inflation has fallen below the ECB's 2% target. The drop was largely due to a sharp slowdown in services inflation, down to 3.2% from 4.0%. Energy prices fell 3.6%, while food, alcohol, and tobacco inflation rose to 3.3%. Inflation for industrial goods was steady at 0.6%, and core inflation eased to 2.3%, its lowest since January 2022. The data supports expectations for further rate cuts.

ADP Nonfarm Employment Change (May)

Private US businesses added 37,000 jobs in May, the lowest since March 2023 and well below the 115,000 forecast. The services sector gained 36,000 jobs, led by hospitality and finance, but saw losses in professional services, education, and trade. Goods producers shed 2,000 jobs, mainly in mining and manufacturing, partly offset by a 6,000 gain in construction. Pay growth stayed strong, with job-stayers seeing 4.5% and job-changers 7%, unchanged from April.

ISM Non-Manufacturing PMI (May)

The ISM Services PMI fell to 49.9 in May from 51.6, indicating the first contraction in the sector since June 2024 and missing the 52 estimate. New orders, inventories, and backlogs shrank, while production stalled. Price pressures rose to their highest level since November 2022, likely due to tariffs. Supplier deliveries slowed, while employment rebounded. Survey responses highlighted uncertainty around tariffs, with many firms delaying purchases.

BoC Interest Rate Decision (June)

The Bank of Canada kept its policy rate at 2.75% in June, pausing after previous cuts totaling 2.25 percentage points. The decision reflects concern over unpredictable US tariffs and trade talks. With tariffs remaining high and new measures possible, the BoC cited risks to Canadian export demand and inflation expectations as reasons for caution.

ECB Interest Rate Decision (June)

The European Central Bank cut its deposit rate by 25 basis points to 2.0% to support growth amid easing inflation and global trade uncertainty, as widely expected.

Average Hourly Earnings (May)

US average hourly earnings rose 0.4% in May to $36.24, beating the 0.3% forecast and doubling April’s pace. Production and nonsupervisory workers saw similar gains. Year-on-year wage growth stayed at 3.9%, above the expected 3.7%.

Nonfarm Payrolls (May)

The US added 139,000 jobs in May, slightly above expectations but down from April’s revised 147,000. Healthcare, hospitality, and social assistance drove gains. Manufacturing lost 8,000 jobs, and the federal government shed 22,000. Revisions to March and April data showed 95,000 fewer jobs than initially reported. Despite this, the labor market remains solid, though Trump administration policies could add pressure.

Unemployment Rate (May)

Unemployment stayed at 4.2% in May, matching expectations and maintaining a steady range since mid-2024. The labor force shrank, with 696,000 fewer employed and 71,000 more unemployed. Participation fell to 62.4%, matching February’s two-year low, and the U-6 rate remained at 7.8%.

Currencies

The US dollar index rose over 0.4% to above 99.1 after strong jobs data. May payrolls beat expectations at 139,000, with 0.4% wage growth and 4.2% unemployment holding steady. However, economic slowdown concerns and Fed uncertainty kept the dollar on track for a slight weekly loss.

The euro slipped below $1.14 after stronger US data and the ECB’s 25 bps rate cut. Lagarde hinted that further cuts may be limited, while the ECB trimmed inflation forecasts due to energy prices and a stronger euro.

The pound climbed to $1.355, near a three-year high, helped by solid UK data and a £15 billion defense plan under AUKUS. Manufacturing contracted less than expected, and house prices rose 3.5% YoY.

The yen weakened toward 144, pressured by expectations around the US jobs report and weak Japanese spending. A call between Trump and Xi Jinping brought plans to resume trade talks but no breakthrough. BOJ Governor Ueda reaffirmed openness to rate hikes if needed.

Commodities

Gold futures fell below $3,350 per ounce on Friday after strong US jobs data reduced fears of a major labor market slowdown. The US added 139,000 jobs in May, beating the 130,000 forecast, while April’s figure was revised to 147,000. Unemployment held at 4.2% and wages rose 3.9% year-on-year, both pointing to steady labor conditions.

Gold's earlier gains faded after a call between Donald Trump and Xi Jinping, where they agreed to resume stalled trade talks. Still, gold was up about 2% for the week, supported by safe-haven demand following Trump’s 50% tariff move on steel and aluminum.

WTI crude oil rose above $64 per barrel, helped by the upbeat US jobs report and signs of improving US-China relations. Wildfires in Canada disrupted about 7% of national output but eased with recent rain. Saudi Arabia also proposed an OPEC+ production hike of at least 411,000 barrels per day starting in August, increasing oil’s rebound. WTI was on track for a 6% weekly gain.

Silver prices jumped past $36 per ounce, the highest since February 2012. Gains were driven by technical strength, tight supply, and rising industrial demand—especially in solar, electronics, and clean energy. Silver demand from industry makes up over half of total use. Supply deficits continue for a fifth year, though the Silver Institute expects a 21% narrowing in 2025

Rate cut hopes also supported silver as recent data pointed to economic softness. Jobless claims rose, hiring slowed, and the services sector unexpectedly contracted. Still, the stronger May payrolls data left the Fed’s next move uncertain.