Core Viewpoint - The U.S. labor market is showing signs of cooling, with recent employment data indicating a slowdown in job growth and an increase in unemployment claims, leading to heightened market caution ahead of the upcoming non-farm payroll report [1][2][3]. Employment Data Summary - The U.S. Department of Labor reported that initial jobless claims rose to 247,000 for the week ending May 31, exceeding market expectations of 235,000, marking the highest level in nearly eight months [1]. - The four-week moving average of initial claims increased to 235,000, while continuing claims slightly decreased but remained high, indicating prolonged reemployment times for unemployed individuals [1]. - Challenger's report indicated that U.S. employers announced 93,816 layoffs in May, a decrease from April's 105,441 but a 47% increase compared to the same month last year [2]. Job Creation and Economic Sentiment - ADP reported that the private sector added only 37,000 jobs in May, significantly below the market expectation of 110,000 and the revised 60,000 from April, representing the lowest level since March 2023 [2]. - Economic uncertainty, particularly related to trade policies, has made companies hesitant to hire, with predictions of further labor market weakness in the coming months due to the impact of tariffs [2][3]. Forecasts and Analyst Insights - Analysts predict that the upcoming non-farm payroll data will reveal the true impact of changing trade conditions on the U.S. labor market, with expectations of a decline in job growth to 130,000 from April's 177,000 [2][3]. - The consensus forecast anticipates the unemployment rate to remain at 4.2%, with average hourly earnings expected to increase by 0.3% month-over-month, up from 0.2% [2].

Group 1 - The U.S. House of Representatives passed a significant tax reform bill, which could potentially increase the national debt by approximately $3.8 trillion over the next decade, raising the current debt level of $36.2 trillion [1] - The stock market showed mixed results following the tax reform news, with the Dow Jones Industrial Average closing at 41,859.09, down 1.35 points, and the S&P 500 index down 2.60 points to 5,842.01, while the Nasdaq Composite rose by 53.09 points to 18,925.74 [1] - Among the 11 major sectors of the S&P 500, 8 sectors declined, with utilities and healthcare leading the losses at 1.41% and 0.76%, respectively, while consumer discretionary and communication services were the best performers, rising by 0.56% and 0.32% [1] Group 2 - Short-term economic benefits from the tax reform are anticipated, including GDP growth and increased spending, particularly in defense, which could stimulate the economy [2] - Long-term concerns regarding the tax reform include exacerbating the fiscal deficit, leading to rising yields and declining bond attractiveness, as noted by analysts [2] - The bond market showed some relief after Moody's downgrade of the U.S. credit rating, with the 30-year Treasury yield falling below 5.1% and the 10-year benchmark yield around 4.55% [2] Group 3 - The Federal Reserve is considering interest rate cuts if the Trump administration's tariff policies are less concerning than previously thought, with recent data indicating a rebound in U.S. business activity [3] - The preliminary S&P Global Composite PMI for May rose to 52.1 from 50.6 in April, indicating moderate economic expansion, although the labor market shows signs of weakness with rising unemployment claims [3] - Market expectations suggest at least two rate cuts of 25 basis points each by the end of the year, as investors monitor economic trends and fiscal policy developments [3]