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All Eyes On NFP

The song remains essentially unchanged. The S&P punched to fresh highs today, dancing to the all-too-familiar “bad news is good news” rhythm. The ADP print was ugly—no sugar-coating it—dragging the US Macro Surprise Index to its weakest since last September. But the market barely flinched. Instead, it doubled down on the Fed pivot sugar rush.

US majors eked out modest gains, brushing off the soft private jobs read like background static. We’re now three months into climbing this wall of worry, and somehow, there’s still oxygen at these altitudes. Weak data isn’t seen as a risk signal anymore—it’s become the red carpet for rate-cut bettors.

And that shift in tone was enough to spark the ubiquitous short squeeze.

Long-end Treasuries caught a chill today, not just from U.S. fiscal fears but from a full-blown gilt tantrum across the Atlantic. UK bonds buckled after political tremors rattled confidence in Chancellor Reeves’ grip on the fiscal wheel. The 10-year yield surged 16 bps, marking the sharpest one-day move since the April bond rout and even flirting with the chaos levels last seen during Liz Truss’s “mini-budget” meltdown.

The catalyst? A very public U-turn on disability cuts, a visibly shaken Reeves in the Commons, and PM Starmer refusing to throw her a lifeline. With a fresh £5bn hole blown into Labour’s fiscal plans and minimal budget headroom, investors now fear the UK may need to lean into higher taxes—or scale back its already-thin spending ambitions.

That spike in gilt yields didn’t stay local. U.S. Treasuries—already uneasy after Trump’s sweeping tax-and-spend package passed the Senate—tracked the move, with duration underperforming. Traders are waking up to the uncomfortable symmetry: ballooning deficits, shaky fiscal discipline, and markets that are no longer giving policymakers the benefit of the doubt.

Across both sides of the Atlantic, the message is clear—bond vigilantes aren’t dead. They’ve just been sleeping.

Swinging back across the pond, all eyes are now fixed on the NFP print dropping at the New York open. Economists are penciling in 110,000 jobs for June—the softest in four months—alongside a mild uptick in the unemployment rate to 4.3%. Wednesday’s ADP already cracked the surface, showing the first drop in private payrolls in over two years. And while Powell keeps insisting the labor market remains “solid,” the Fed’s been hiding behind that strength to justify its inaction.

But if that support starts to wobble—if NFP underwhelms again—the market won’t wait. Rate-cut odds will surge, and equity bulls will treat it like a starter pistol. The Fed may be trying to hold the line, but one weak print could be enough to tip them—and send stocks into another FOMO-fueled dash higher.

In that light, following the soft ADP print, traders have already positioned themselves all in for at least two rate cuts this year, so the street is anticipating a weak NFP. Hence, at this point, even a modest miss versus the +110,000 consensus is likely to be shrugged off as already in the price.

It’ll probably take a sub-55,000 print to really move the rate cut needle into July and deliver meaningful juice to both stocks and bonds. That said, this is a market feeding on disappointment through the rate cut channel. So while -55k is my trigger for a full-blown bond bid, even a sub-100k print could tilt the scales psychologically, especially if unemployment nudges higher or revisions turn deep south.

The dollar closed flat on the day—less a signal, more a stall. FX traders are in wait mode ahead of NFP. If the print lands soft, as expected, July rate cut odds could drift higher from 23% and crack the dollar’s two-day stability buffer. One weak read, and the greenback could lose its footing fast.

Redrawing the Map: Global Trade Realigns to Shut Out China

Global trade isn’t just shifting—it’s being systematically redrawn, and Beijing knows it. The U.S. is no longer playing whack-a-tariff. It’s architecting a new trade perimeter, one bilateral deal at a time, aimed squarely at isolating Chinese supply chains. The Vietnam deal was the first brick: a tiered tariff structure designed to punish transshipped Chinese goods and squeeze out components with mainland fingerprints.

India is next in line, negotiating over “rules of origin” thresholds that could effectively wall off Chinese content. Across the Pacific, South Korea and Taiwan are tightening compliance. Even Brussels is being pulled into Washington’s gravity field—with Beijing sounding the alarm on what it sees as quiet alignment against its economic interests.

The concern for China isn’t just exclusion. It’s erosion. These new rules don’t name China, but the intent is unmissable—reroute global supply chains toward “trusted” zones and leave Beijing on the outside. If these agreements harden into global norms, China risks becoming the middleman no one needs—its value-add diminished, its access quietly curtailed.

Markets are starting to price it in. From semiconductors to EVs, the trade lanes are shifting, and Chinese names are feeling the pinch. Export controls are tightening, tech alliances are calcifying, and geopolitical trust is now baked into the cost of doing business.

Beijing’s response has been familiar: diplomatic warnings, threat-laced statements, and selective trade retaliation—targeting brandy, dairy, seafood, and more. But the broader trend is structural, not cyclical. This isn’t tit-for-tat. It’s an economic redrawing of borders.

As the July 9 tariff deadline looms, what’s at stake is no longer a trade truce. It’s the foundation of a new global order—one where Beijing no longer gets to set the terms or sit at the center of the supply chain map.

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