1505 ET - Treasury yields recover ground lost after disappointing labor data and end the week higher. The BLS puts June job creation at 57,000, about half as many as expected. The surprise reduces odds of Fed interest rate increases priced into fed fund futures, although at least one hike this year remains the highest probability, according to CME. Inflation expectations priced inswaps trade match the Fed's 2% target, according to LSEG. Bond markets close earlier and won't reopen until Monday. Next week will bring June services PMI and existing home sales. The 10-year yield rises 0.105 percentage point this week to 4.447%. The two-year increases 0.043 p.p. to 4.130%. (paulo.trevisani@wsj.com; @ptrevisani)
1425 ET - The U.S. decision not to renew the USMCA adds a degree of uncertainty as the three partners enter a phase of annual reviews, but hasn't changed things for manufacturers already in Mexico, says Jorge Gonzalez Henrichsen, co-CEO of The Nearshore Company. "Clients are like, I can't control that variable so I will just keep going," he says. But firms thinking of setting up shop in Mexico give the sense that they're moving slower. Those companies consider other options such as other countries or staying in the U.S. and moving more toward automation. Some expect the uncertainty to go on for years and are starting to move forward anyway, "but others are still on a wait-and-see mode," Gonzalez Henrichsen adds. (anthony.harrup@wsj.com)
1347 ET - Bitcoin had a tough first half of the year, dropping 35% since Jan. 1 to find a recent multi-year low of around $58,000. But bitcoin and other cryptocurrencies are off to a hot start in July, jumping back up to over $61,600 after the payrolls report showed less jobs added than previously anticipated by surveyed analysts. Cryptocurrency research firm 21shares says that they are maintaining "cautious optimism" on bitcoin's prospects in the second half of 2026, although the factors that have been pressuring prices are not expected to disappear. "The number of wallets holding BTC continues to grow," says the firm in a note. "Our year-end base case is a recovery toward $100,000 rather than a breakout to new all-time highs." (kirk.maltais@wsj.com)
1311 ET - Investor sentiment improved after the Bureau of Labor Statistics released its latest jobs report, which showed 57,000 jobs being added in June. That's roughly half of what analysts surveyed by The Wall Street Journal ahead of the report expected, but investors became more hopeful that interest rate hikes can be avoided, at least for now. But it isn't expected to be a meaningful long-term change in the macroeconomic landscape, says Jonas Goltermann of Capital Economics in a note. "The data released today don't change our view that the market is underestimating the chances of the FOMC returning to rate hikes later this year," says Goltermann, forecasting continued tightening in the labor market. (kirk.maltais@wsj.com)
1132 ET - Even with bitcoin pushing over the $60,000 mark, outflows from bitcoin ETFs are continuing. According to data from CoinGlass, net ETF outflows actually rose from the prior day yesterday, up to $296 million from $222.6 million previously. But sentiment is turning warmer for bitcoin and cryptocurrencies in general as 3Q begins. CoinMarketCap's "Fear and Greed Index" poked out from "extreme fear", rising to a reading of 22 out-of 100, which is in "fear" territory. "The first two days of 3Q tell a different story," says CoinMarketCap in a separate note. Bitcoin is up 2.5% to $61,592, ethereum rises 5.1% to $1,699, XRP climbs 3.1% to $1.09, and solana advances 4.3% to $80.65. (kirk.maltais@wsj.com)
1115 ET - The dollar weakens against major currencies, including 1% versus the yen, following dismal U.S. payrolls data. The decline may ease the prospect of imminent intervention to prop up the Japanese currency, but at 161 per dollar, the yen remains a point of concern. An intervention would entail sales of dollars and other FX reserves by Japanese authorities, Capital.com's Daniela Hathorn says. Treasurys could get in the mix, but not enough to push yields much higher. "The bigger question is will intervention even work," she says. Hathorn adds that past actions didn't have a lasting impact because "fundamentals hadn't changed as exchange rates ultimately follow interest-rate differentials and capital flows." (paulo.trevisani@wsj.com; @ptrevisani)
11:11 Evercore ISI says a "back-to-normal employment report keeps the Fed focus on inflation." The economists believe the Fed will look at the weaker June jobs report as bringing hiring data back into better alignment after prior months where payrolls were surprisingly strong. "Some argue that this report makes rate hikes this year significantly less likely. We do not really agree," they say. Santander's Stephen Stanley concurs. "It will be the inflation data that determine the FOMC's course of action," he says. He thinks the June jobs report may change the perception of Fed officials "ever so slightly," but thinks most policymakers regard the labor market as stable. "There was a substantial kneejerk reaction in financial markets, including scaling back the odds of rate hikes this year. I view the latter as an improper response to this release." (patrick.sheridan@wsj.com)
1105 ET - Short-dated quality credit offers attractive yields, making it a good investment opportunity, UBS Global Wealth Management strategists say in a note. Markets seem to be overpricing the possibility of interest-rate rises by major central banks, meaning yields are likely to fall over the coming months, the strategists say. "We believe short- to medium-maturity quality bonds offer an appealing risk-return profile," they say. (miriam.mukuru@wsj.com)
1101 ET - A smaller-than-expected showing in June job creation is giving beleaguered cryptocurrencies fresh support today, in hopes that any near-term Fed rate hikes could be delayed. Bitcoin is up 2.7% to $61,689, and other cryptocurrencies are following suit. Ethereum is back above $1,700 for the first time in over a week, rising 5.4% to $1,705. Some traders are hopeful that the worst is over for ethereum this year. "Bulls are hoping the $1,500 level can continue to act as support," says Bret Kenwell of eToro in a note. "The overall trend has been bearish for ethereum, but if momentum can shift bullish in the coming days and weeks, a larger rebound could follow." (kirk.maltais@wsj.com)
1051 ET - Emerging-market bonds look attractive as they are likely to benefit from global economic growth, UBS Global Wealth Management strategists say in a note. Emerging-market economies also have a wealth of commodities which should support performance, the strategists say. Emerging-market bonds offer diversification and favorable yields, they say. (miriam.mukuru@wsj.com)
1048 ET - Mexican peso stability after the U.S. declined to renew the USMCA, sending the trade pact into a process of annual reviews, shows the decision was widely expected, HSBC Mexico's chief economist José Carlos Sánchez says in a note. The timeliness and clarity of the U.S. statement are ultimately positive for the peso, he says. Althougha review process is less ideal than a "clean" renewal, that was never a realistic expectation and "we still see Mexico benefiting from greater access to the U.S. economy than other emerging market peers." The peso trades at 17.47 to the U.S. dollar, compared with 17.56 yesterday.(anthony.harrup@wsj.com)
1038 ET - Odds of an interest rate increase by the Fed decline in futures markets as slower-than-expected job creation in June gives the central bank fewer reasons to be hawkish. Investors are pricing in 18% odds of a July hike, down from 29% yesterday, according to the CME's FedWatch tool. Odds of at least one cut by year end fall to 76% from 83%. The BLS reports 57,000 new jobs in June, while economists surveyed by WSJ expected 115,000. "The combination of more tepid data on the labor market and the sharp decline in oil prices should reduce the likelihood of rate hikes from the Fed," AllianceBernstein's Eric Winograd writes. (paulo.trevisani@wsj.com; @ptrevisani)