We expect nonfarm payrolls (NFP) slowed to 75k in June against May's print of 172,000 and current market estimates for June at 115,000. Lead indicators for the labor market have remained steady, but the fading impact of temporary factors that boosted hiring in May likely points to a softer June print. The unemployment rate likely remained unchanged at 4.3%. We expect average hourly earnings growth slowed to 0.2% m-o-m, driven by a negative calendar effect. Lead indicators and alternative wage measures suggest wage pressures are easing, albeit gradually. Our NFP forecast is mainly driven by partial negative payback after exceptional strength in recent months. Overall, we believe the labor market remains resilient and is likely to gain steam in the coming months at least till Sep’26. Steady labor market conditions should keep Fed officials focused squarely on upside inflation risks. We expect the Fed to keep policy on hold in REMCY26, with inflation developments posing risks to potential rate hikes. Markets are currently pricing in 32 bps of hike by end CY26 which has come down from as much as 40 bps last week. 1yr-1yr US SOFR remains our strong convincing idea based on above view, but the entry is yet to be triggered. We like receiving half risk at 4.15 and another half at 4.25 with stop at 4.4 and TP at 3.90. Last week it made a high of 4.12 before cooling down to current levels of 3.92. We also like being bullish on DXY till Sep against JPY and GBP. We turn neutral on EURO against USD.
