Trading Day: Pause before jobs

July's U.S. employment data will be released on Friday. Non-farm payrolls is traditionally one of the data points that markets move most on, but this time might be different. Employment indicators are a mixed bag right now; generally solid with some signs of weakness that ultimately paint a picture of broad stability. Fed policymakers agree that the labor market is in a highly unusual spot — a "low hire/low fire" stasis amid heightened AI uncertainty. It's stating the obvious, perhaps, but it would need a major surprise to really jolt markets and move the needle on rate expectations, as the Fed is more focused on the inflation side of its mandate than the employment side. The few remaining Wall Street firms calling for Fed rate cuts, like Citi, say they anticipate a pretty rapid labor market deterioration in the coming months. Will we get a glimpse of that on Friday? * **Stocks:** South Korea -5%, Japan -1%. Europe and the UK little changed. Wall Street in the red: Dow -1%, S&P 500 -0.3%, Nasdaq -0.1%. * **Sectors/shares:** Eight sectors on the S&P 500 fall, three rise. Industrials, materials and real estate all down 0.8%. Energy +1.6%. Honeywell Aerospace -23%, Western Digital -13%. Motorola +8%, Disney +3%. * **FX:** Dollar rises broadly for best day in two weeks. Yen has now given back almost half of its post-intervention gains. * **Bonds:** Japan yields fall, especially at the long end, as the 30-year auction goes better than the 10-year sale earlier this week. U.S. yields up 4-7 bps, curve bear flattens. * **Commodities/metals:** Oil rises, Brent +4%, WTI +3%. Gold little changed around $4,250/oz. Debate around last week's historic yen intervention rages on. Washington's involvement was more symbolic than anything else, and despite pledges of solidarity with Tokyo, its appetite for further action is surely limited. Tokyo may have the stomach for more, and has the firepower, but Washington won't want to see Treasuries being sold. Also, the Fed's FIMA facility has limited capacity. The yen has given back nearly half of its post-intervention gains, and we will see in the next few weeks how effective the intervention was. The debate will inevitably return to "fundamentals" — only a meaningful change in Japanese policy will ease the pressure on the yen over the long term. Rate hike expectations for the BOJ and Fed next month are similar, at around a 55% probability, and both central banks could be tightening into next year. Maybe "the fiscal" will need to do more of the lifting. U.S. workers saw their share of the U.S. economy slide to a new low in the second quarter, figures on Thursday showed. This comes as the Q2 earnings season shows eye-watering U.S. corporate profit growth, with companies already enjoying a record share of the national economic pie. This is another "K-shaped" feature of the U.S. economy that speaks to the perception that the wealthy and owners of capital are faring much better than everyone else. The rich can fuel stock market and GDP growth for so long, but Moody's Analytics economist Mark Zandi and others warn it's unsustainable. Consumers are noticing mortgage rates, gas prices and general inflation. So might voters in November. The S&P 500 and Dow on Thursday pulled back from the previous day's record highs, pausing their strong earnings-driven start to the month, while Treasury yields and the dollar rose as investors turned their attention to U.S. employment data on Friday. In my column today, I look at the first of several SpaceX share lockup expiries and its potential impact on retail investors. They took up an unusually large 20% of the IPO, so are sitting on large paper losses. But they have significantly reduced their broader tech holdings and leverage recently, so may be tempted to add exposure.

Trading Day: Pause before jobs

A job lot

Today's key market moves

Intervention half-life and Special K

Markets pause ahead of U.S. jobs data

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