Head-Scratching Time as Financial Markets Emerge from Inconclusive War in Fine Shape, Await June Jobs Data and Take in America’s Semiquincentennial Milestone
July 2, 2026
The dollar gave back a little ground overnight but remains elevated in the context of this century’s general experience. The U.S. currency lost 0.7% against the yen but remains close to a four-decade peak. The euro edged up 0.2% but is closer to its all-time low of $0.8230 touched in 2000 than the high of 1.6038 reached in July 2008.
Despite recent jitters about the valuations of tech stocks and expectations of a smaller rise in jobs than seen earlier in the spring, the DOW and SPX in futures trading before the open are holding near record highs. Equity performances in Asia today were quite diverse, with losses of 2.5% in Japan, 7.9% in South Korea and 2.0% in China but gains of 1.1% in Singapore, 0.9% in Indonesia and 0.8% in India and Hong Kong. Major European stock exchanges are close to 1% higher.
The return to riskier assets reflects a combination of resilient corporate earnings and faith that like earlier periods of conflict in the Middle East, the war in Iran’s drag on markets will wind down quickly now that everyone is looking to move on. Meanwhile, the past few months have U.S. jobs figures outperforming analyst expectations, leaving the impression that the labor market has moved past the wobbles of 2025. Also, Fed Chairman Warsh has balanced his earlier insistence that the central bank will do whatever to regain price stability defined as 2% with yesterday’s observation that expected inflation has indeed fallen over the past month.
The race back into riskier assets has pushed long-term interest rates higher. Ten-year sovereign debt yields rose overnight by eight basis points in Japan, five bps in the U.K., France and Italy, four bps in Australia and Germany and two bps in the United States and Switzerland.
Somewhat strangely, a lead story in today’s general news is that President Trump’s business ventures in crypto currencies accounted for the largest part of earnings last year that in total approached $2 billion. To students of economics, the allure of crypto has been mystifying from the get-go, since it lacks most of the qualities that any money and banking student is taught that a successful money needs to have. Nonetheless, Bitcoin’s price jumped 2.1% overnight, while the costs of WTI oil, gold and silver fell by 1.4%, 0.3% and 0.9%.
With the U.S. holiday weekend close at hand, data releases today have been minimal. Of special note,
- Euroland unemployment in May matched April’s record-tying low of 6.2%. Such had also been 6.2% in the final quarter of 2025.
- Australia’s rare trade deficit of A$ 3.01 billion in May was the second shortfall of this year and the largest gap in 125 months. The year-to-date surplus of A$ 4.1 billion 80% smaller than in January through May of 2025.
- South Korean consumer price inflation of 3.2% in June was its highest in 2-1/2 years but associated with a downtick of core inflation to 2.4%.
- CPI inflation in Cyprus of 3.1% last month was at a 32-month high versus a low-point last year of -0.9%.
- The perennial gold-medalist in price stability, Switzerland, experienced a smaller year-on-year 0.5% rate of CPI inflation and an even lower 0.3% when excluding volatile energy and food items.
- Romanian producer price inflation, which had bottomed at -8.0% in March 2024, rose to a 37-month high of 12.1% in May.
- Irish GDP growth in the first quarter has been revised to -7.0% quarter-on-quarter and a record low year-on-year pace of minus 13.0%.
U.S. labor market data from June were disappointing in several respects despite declines in the unemployment and the U-6 measure of under-employment and unemployment. Two things in particular stand out. Number one, the 158.984 million level of nonfarm jobs in June was actually lower than the initial estimate for May of 159.001 million. This happened because a) June’s increase of 57k was only half as much as forecast and b) a combined downward revision to April-May jobs growth of 74k. Number two, labor market participation declined by 0.3 percentage points between May and June, an unusually large change from one month to the next. At 61.5%, the labor market participation ratio was its lowest since March 2021 in the very early days of a Covid vaccine’s availability. As a percentage of the population, employment fell 0.2 percentage points to 59.0%. Other elements to note in today’s report include continuing stagnation in manufacturing jobs that on balance rose just 1k nationwide between the ends of the first and second quarter. The drop in unemployment from 4.3% to 4.2% returned such to its lowest level in a year; at 7.9%, the U-6 measure was at a 4-month low. Last but hardly least, average hourly earnings rose in June by an as-expected 0.3% on month and 3.5% on year (versus 3.4% YoY in May). Compared to 3.6% way back in July 2024, wage growth has plateaued almost 1.5 percentage points above the inflation target.
Fifteen minutes shy of the opening bell on Wall Street, U.S. equities had moved into positive territory, the 10-year U.S. Treasury yield had slipped by two basis points to show no net overnight change, and the dollar had risen somewhat against the euro but lost a tad versus the yen.
Still ahead: Canadian manufacturing purchasing managers survey and U.S. factory orders.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Euroland unemployment, Swiss CPI, U.S. June 2026 employment situation
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