Thu, July 3, 2025 | 7:50AM ET

July showing pullbacks remain shallow. The continued strength in high-yield shows the economy remains healthy.

VIDEO: Ahead of the June jobs report, bonds markets are quietly pricing in 2.6 cuts versus 1.7 after June FOMC. This while high yield spreads remain tight suggests bond markets see less inflation ahead, counter to Fed view

Please click below to view our Macro Minute (duration: 3:36).

July showing pullbacks remain shallow. The continued strength in high-yield shows the economy remains healthy.

In our view, pullbacks will continue to be shallow as long as this remains “the most hated V-shaped rally.” And the S&P 500 for the first two days of the month is evidence of this.

The June ADP report came in as a downside reading -33K vs +98K consensus. If you received our intraday FlashInsight this am, we noted the details were not that bad. It does not look like tariffs were the reason for the weakness. Rather, it was losses in financial services, professional services and education. School being out explains the latter. Is DOGE the reason for weakness of others? Less consulting, etc?
President Trump also renewed his attacks on Fed Chair Powell on truthsocial.com and Friday’s job report will be closely watched. The Street is looking for +110k and this is about flat with last month. But if the labor market is as soft as the ADP report, likely pressure on the Fed will rise (to cut rates).
Currently Fed Fund futures are pricing in 2.6 cuts, or +0.60 more than the dot plots. This figure has been creeping up. It can creep up for two reasons:
– Economy is getting weaker, so Fed has to act
– Inflaton is falling, so Fed should cut.
The high-yield market spreads are continuing to rally. This is a sign that economic momentum remains strong. So this creeping up argues inflation risks are falling. As bond markets will likely largely ignore the expected “summer bump up in tariffs”
The macro data this week is below. The most important ahead is the June Jobs Report on Thu:
– 6/30 Mon 10:30 AM ET: Jun Dallas Fed Manuf. Activity Survey -13 vs -14e
– 7/1 Tue 9:30 AM ET: Powell Participates in Panel with Lagarde, Bailey, Ueda
– 7/1 Tue 9:45 AM ET: Jun F S&P Global Manufacturing PMI    52.9 vs 52.0e
– 7/1 Tue 10:00 AM ET: Jun ISM Manufacturing PMI    49.0 vs 48.7e
– 7/1 Tue 10:00 AM ET: May JOLTS Job Openings    7769k vs 7300ke
– 7/3 Thu 8:30 AM ET: Jun Non-farm Payrolls    110ke
– 7/3 Thu 8:30 AM ET: May Trade Balance    -71be
– 7/3 Thu 9:45 AM ET: Jun F S&P Global Services PMI    53.1e
– 7/3 Thu 10:00 AM ET: Jun ISM Services PMI    50.8e
– 7/3 Thu 10:00 AM ET: May F Durable Goods Orders MoM    16.4%e
– 7/4 Fri: Independence Day (Market Closed)
Keep in mind seasonals remain favorable. As tireless Ken and Mark Newton both note, July in the first year of a Presidential Term is a median gain of +2.4%, the best month over first term.

BOTTOM LINE: Still “most hated rally”

This still remains the “most hated” V-shaped stock rally. We view Bitcoin as a leading indicator and thus, we expect stocks to reattain all time highs, which Bitcoin achieved last week. We see S&P 500 reaching 6,600 by year-end.

And the expected drivers for this upside are:

Still most hated rally
Sizable perception gap: Tariff “bark worse than bite”
Hedge funds increased short interest recently
$7 trillion cash on sidelines
Investment outlook better now than in Feb 2025:
– tariff visibility
– tax and de-regulation visibility
– US cos survived 5^th major “stress test”
– Fed more dovish in 2026

As for what we would buy

Washed out stocks
MAG7 & Bitcoin
Industrials
Financials: Large-cap and regional banks
Small-caps

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Key Incoming Data July:

~~7/1 9:45 AM ET: Jun F S&P Global Manufacturing PMI~~ Tame
7/~~1 10:00 AM ET: May JOLTS Job Openings~~ Mixed
~~7/1 10:00 AM ET: Jun ISM Manufacturing PMI~~ Tame
7/3 8:30 AM ET: Jun Non-farm Payrolls
7/3 8:30 AM ET: May Trade Balance
7/3 9:45 AM ET: Jun F S&P Global Services PMI
7/3 10:00 AM ET: May F Durable Goods Orders MoM
7/3 10:00 AM ET: Jun ISM Services PMI
7/8 6:00 AM ET: Jun Small Business Optimism Survey
7/8 9:00 AM ET: Jun F Manheim Used Vehicle Index
7/8 11:00 AM ET: Jun NYFed 1yr Inf Exp
7/9 2:00 PM ET: Jun FOMC Meeting Minutes
7/15 8:30 AM ET: Jun Core CPI MoM
7/15 8:30 AM ET: Jul Empire Manufacturing Survey
7/16 8:30 AM ET: Jun Core PPI MoM
7/17 8:30 AM ET: Jul Philly Fed Business Outlook
7/17 8:30 AM ET: Jun Retail Sales
7/17 9:00 AM ET: Jul M Manheim Used Vehicle Index
7/17 10:00 AM ET: Jul NAHB Housing Market Index
7/17 4:00 PM ET: May Net TIC Flows
7/18 10:00 AM ET: Jul P U. Mich. 1yr Inf Exp
7/22 10:00 AM ET: Jul Richmond Fed Manufacturing Survey
7/23 10:00 AM ET: Jun Existing Home Sales
7/24 8:30 AM ET: Jun Chicago Fed Nat Activity Index
7/24 9:45 AM ET: Jul P S&P Global Services PMI
7/24 9:45 AM ET: Jul P S&P Global Manufacturing PMI
7/24 10:00 AM ET: Jun New Home Sales
7/24 11:00 AM ET: Jul Kansas City Fed Manufacturing Survey
7/25 8:30 AM ET: Jun P Durable Goods Orders MoM
7/28 10:30 AM ET: Jul Dallas Fed Manuf. Activity Survey
7/29 9:00 AM ET: May S&P CS home price 20-City MoM
7/29 10:00 AM ET: Jul Conference Board Consumer Confidence
7/29 10:00 AM ET: Jun JOLTS Job Openings
7/30 8:30 AM ET: 2Q A GDP QoQ
7/30 2:00 PM ET: Jul FOMC Decision
7/31 8:30 AM ET: Jun Core PCE MoM
7/31 8:30 AM ET: 2Q ECI QoQ

Economic Data Performance Tracker 2025:

Economic Data Performance Tracker 2024:

Economic Data Performance Tracker 2023:

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