Hi YXI friends,
Tomorrow we will have the Nonfarm Payrolls for Thursday. Alongside the CPI, it’s the most-watched economic data point for US investors.
However, there has been a pattern since May 2025, where every net job gain (the dark bars) is followed by a similarly sized loss (the red bars) the month after. It is likely driven by increased data noise, so the second month mean-reverts relative to the first month.
This phenomenon has even pushed the Fed to introduce new language: “Job gains have remained low, on average…in recent months.”
If I had to guess, tomorrow’s NFP report will see a large negative figure, which could disappoint the consensus expectation of +65k net new jobs. The market may react with a growth scare (“Stagflation!), pushing yields and risk assets lower.
Overnigh US-Iran Update:
The US is waiting on Iran to respond to its proposal to reopen the Strait of Hormuz and end a war that’s killed thousands of people and triggered a surge in energy prices.
Iran is expected to give an answer in the coming days, though its leaders have previously shown little sign of yielding on their nuclear program and accepting a moratorium on enriching uranium.
The US proposal calls for a moratorium on Iran's uranium enrichment program and the removal of sanctions on Iran, with all conditions reversible if a wider nuclear deal can't be reached.
What if Iran rejects the proposal?
The US will start a broader and more intense bombing campaign if Iran rejects the initial 14-point peace plan, Trump said earlier in a social media post.
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