1948 ET - Japanese stocks may remain rangebound as uncertainty over the Middle East conflict continues. Nikkei futures are flat at 68675 on the SGX. The dollar is at 161.31 yen, down from Y162.25 as of Thursday's Tokyo stock market close, following disappointing U.S. jobs data. Investors are focusing on any progress in U.S.-Iran peace talks and crude oil prices. The Nikkei Stock Average fell 2.5% to 68733.15 on Thursday. (kosaku.narioka@wsj.com)
1905 ET - Reports that Japan's Ministry of Finance is abandoning its custom of telegraphing intervention risks and may instead enter the FX market to surprise market participants, has traders on edge. The idea here is the prospect of surprise intervention may make speculators think twice before adding to bearish JPY positions, says CBA economist Joe Capurso. With U.S. markets closed for Independence Day celebrations, currency liquidity will be thin--an ideal time to have a large effect on the market, he adds. The MoF has surprised markets with interventions during public holidays before. (james.glynn@wsj.com; @JamesGlynnWSJ)
1856 ET - JPY is the strongest G10 currency, with USD/JPY falling from above 162 to around 161.0, amid reports Japanese authorities may be shifting away from calibrated jawboning toward more surprise-based intervention tactics, says NAB in a note to clients. The issue for JPY remains that fundamentals still point to weakness--deeply negative real yields, slow BoJ normalization and continuing JGB purchases--but thin U.S. holiday liquidity raises the tactical risk of intervention, NAB adds. (james.glynn@wsj.com; @JamesGlynnWSJ)
1844 ET - USD/JPY is lower, weighed down by suspected intervention to support the yen that kicked in around five hours ahead of news of cooler-than-expected U.S. employment data, says Tony Sycamore, market analyst at IG Markets. He expects another round of intervention over the next one or two trading sessions, which would likely secure Tuesday's 162.83 print as a short-term top with scope to hold for the next six to eight weeks. Whether it becomes a more meaningful medium-term high will ultimately depend on incoming U.S. data and, to some degree, developments in the Japanese government bond market, he adds. (james.glynn@wsj.com; @JamesGlynnWSJ)
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)