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Wash Times: The First "Data Test" Has Eliminated Most of the "Rate Hike Trades"

Wash Times: The First "Data Test" Has Eliminated Most of the "Rate Hike Trades"

金融界金融界2026/07/02 12:58
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By:金融界

Source: Wall Street Intelligence Circle

The Waller era, the first “data test.”

Eastern Time 20:30, the first major data release during Fed Chair Waller’s term:

- U.S. June Nonfarm Payrolls: 57,000 (previous: 172,000; market expectation: 110,000)

- Unemployment rate: 4.2% (previous: 4.3%; market expectation: 4.3%)

- Net downward revision of non-farm payrolls for the past two months: 74,000

1. What the market truly wants tonight is not strong employment numbers, but numbers that are “just right.”

1) An increase in employment between 100,000 and 130,000, unemployment rate around 4.3%, and a 0.3% month-on-month wage growth would actually be most comfortable for the market. This signals that employment is not collapsing, nor is it hot enough to force the Fed into an immediate rate hike.

2) If the number exceeds 160,000, the market will immediately price in a faster-than-expected Fed rate hike.

3) Too weak is also not ideal. For example, if below 70,000, at first the market may think the probability of a rate hike drops, but then another narrative will trigger: is the U.S. economy starting to lose momentum? Especially now, with U.S. stocks posting significant gains, AI and tech stocks need an environment of “a not-weak economy and continued earnings realization.”

Tonight is the third scenario.

2. In the Waller era with no forward guidance, each Nonfarm Payroll report is like a mini-FOMC meeting, causing large market swings. After this data release, global markets lost control for a minute—gold surged $60 within one minute, the dollar index plummeted (giving back all gains since June 22), and U.S. stock futures climbed to intraday highs. This data is immediately favorable for gold, U.S. treasuries, and risk assets (the first market move is “the Fed doesn’t need to hike”), but later attention will turn to whether the market shifts from the “rate relief” narrative to “growth concerns.”

3. What matters most next is not Nonfarm Payrolls, but CPI (to be released July 14). Tonight’s Nonfarm Payrolls knocked out much of the “rate hike trading,” but it’s not all over. The real dilemma for the Fed: what if employment is weak but inflation remains hot? That’s the stagflation dilemma, making the upcoming CPI even more important than usual.

Tonight is not ordinary volatility, but rather the market rewriting the script for the July meeting.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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