Beautiful Done Deal. Unemployment Down. Happy 4th July.
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Why did US equities and the dollar surge after the latest payroll report?
Well, US equities are doing very well and the US dollar rising as well. Why? Well, the jobs data looked very strong, but was it really? Maybe markets are responding more to the unemployment number, which did come down a bit. Uh the house passes the big, beautiful bill. And Eshla von der Leyen says that they won't meet the July deadline for avoiding tariffs, but they're gonna work on a broader agreement in principle. Let's see how that goes for them. It's independence day for the United States. The fourth of July 2025. It's the morning call from NAB. Good morning. Well, another great performance for US equities, although closing early in readiness for independence day. But with the Dow is up naught point eight percent, so is the SP.
The Nasdaq climbed over one percent, Amazon climbed one point six percent, so did Microsoft. Uh they're the two big performers. Nothing like an announcement of mass layoffs to boost your share prices, is there, really, rather sadly. Uh European shares also doing okay. The Eurostocks fifty up half a percent, not point six percent for the DAX and the FTSE one hundred. And bonds, well, very different story across either side of the Atlantic. So ten year treasuries are up seven basis points. UK ten year guilts are down seven basis points. Of course they were up a lot yesterday. So uh retracing that a little bit. But even so in Germany ten year yields are down four basis points, down five in France, down seven in Italy.
Uh the US dollar is up today as well, up naught point four percent and getting over ninety seven point four On the DXY in this session. The Yen is the big mover. It's down one percent. The Aussie is down 0.2%. The Swiss franc down half a percent. And oil down today, 0.7% off WTI and 0.4% lower for Brent, which is now back below 69 a barrel. So, non-farm payrolls for June. We actually get to talk about it this time uh because the results are already out this early in the week because of uh Independence Day. And well they look like they're good uh but maybe they're not that good. Uh Nab uh Nab's Tapas Strickland is with me. So good in the one hundred and forty seven thousand new jobs, which is more than expected and more than last time.
Bad because look at the private numbers and look at the government numbers. I mean the government sector's growing, the private sector shrunk.
Good morning Phil. Yes, there's many different ways uh people uh splice payrolls data and I think uh people cut it up based on their prior bias. But if you just take the headline print, as you're noting, hundred and forty seven thousand versus hundred and six thousand expected. Uh that's relatively positive. And going into the print, I think the whisper was it was gonna be a little bit weaker. Uh President Trump did tweet um about four PM on Wednesday uh that uh Chair Powell should resign immediately. Uh and some Some people thought that was in relation to uh the president having been briefed on the payroll numbers. But if you actually looked at the details of his uh truthing or his truth social post, it was more in relation to uh federal expenses in terms of their office refurb uh at uh their main building there.
So that had nothing to do with the payroll numbers. Which will have created
jobs, let's be fair.
Yeah, and so I think that's partly the reason why you had an outsized market reaction to it. But in relation to uh y y you're correct in the sense that private parallels were A little bit softer, uh growing by seventy four thousand versus a hundred thousand expected. Uh but at least for the US labour market, that may be the rate that is needed. Um so when you look at uh the labour force, um labour force growth has slowed quite quite noticeably. That crackdown in immigration. When you look at the participation rate, it fell a tenth uh in the household data. And uh when you look at how many payrolls are needed to keep the unemployment rate stable I've seen estimates out there that range from 44,000 to 77,000.
So you actually may not need that much payrolls growth to keep the unemployment rate broadly stable.
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