Market Trends & Interest Rates - Treasury yields are rising as investors react to weaker jobs data and the potential impact of President Trump's tax and spending package [1] - Interest rates may have peaked in terms of low rates, particularly given the holiday-shortened week [2] - The 10-year Treasury yield continues to move higher [3] Labor Market Analysis - ADP small business job loss data at 8:15 AM EST made some traders nervous, causing yields to drop initially [2] - A potentially weakening labor market could influence the Federal Reserve's decisions [4] - Uncertainty remains whether the day's report is indicative of the larger jobs number to be released tomorrow [5] Federal Reserve (The Fed) & Monetary Policy - A weakening labor market could hasten the Fed's easing campaign [4] - Fed fund futures gravitated towards the upside, indicating expectations of more easing [4] - The market is unsure if today's report is a one-off or a clue about tomorrow's jobs number, impacting expectations for the Fed [5] Bond Market Dynamics - The 2-year yield reflects the most information regarding the Fed [3] - The 210 spread (difference between 2-year and 10-year Treasury yields) bounced back and steepened [3] - The D's contract (likely referring to a specific futures contract) initially reflected the two-year yield's movement but almost returned to unchanged [5]

Fiscal Unsustainability & Debt - US national debt is a staggering $37 trillion, and a proposed bill could add at least $3 trillion more over the next decade [3] - The bill under discussion is projected to increase deficits by approximately $4 trillion [8][19][20] - The US is on a fiscally unsustainable trajectory, with Social Security and Medicare facing potential shortfalls in less than a decade [7] - Increased debt could lead to higher interest rates for consumers and the government, impacting borrowing costs for cars, homes, and credit cards [4] Impact of Proposed Legislation - The bottom 40% of the population is expected to be worse off as a result of the bill, potentially losing health insurance and access to food stamps [9][21] - Over 10 million people are likely to lose their healthcare due to the proposed legislation [5] - The bottom 10% could be $700 worse off annually, while the top 1% may receive a $30,000 tax cut, described as a reverse Robin Hood effect [21] Trade War & Inflation - Trade wars and tariffs are expected to worsen inflation [5] - The Federal Reserve (Fed) indicated it would have cut interest rates if not for the uncertainty caused by tariffs and the trade war [5][23] Global Confidence & US Economy - There's a growing concern about declining global confidence in the US's ability to repay its debts [11] - The Fed paused on lowering interest rates due to the uncertainty caused by the Trump administration's sweeping trade policy [25]

Labor Market Analysis - Job vacancies significantly increased, reaching a 6-month high and exceeding forecasts [1] - The labor market isn't showing signs of weakening, remaining relatively stable [2][3] - There are 7769000 job openings [2] Bond Market Impact - Strength in the labor market could influence the Federal Reserve's upcoming meeting [1] - Two-year and ten-year yields closed at their lowest levels since May 1st prior to Chairman Powell's comments [3] - Rate reversals occurred around 9:30 Eastern time following J Pal's headlines [4] - S&P Global PMIs and Jolts number contributed to upward volatility [4][5] - Major flattening observed, with two-year yields rising more sharply than 10 and 30-year yields [5][6] Currency and Equities - The dollar's performance mirrors the 10-year chart, turning around at the same time and moving higher [5] - Positive indicators for equities and potentially higher rates [2]

Joining me now is Mike Wilson, Morgan Stanley's chief US equity strategist and CIO. Uh Mike, great to have you uh with me here. It's it's it's a fascinating round trip we've had, right, since early uh I guess since February in a sense.Where does the market sit in your mind relative to all the the kind of important drivers, right. I mean, we had this tariff policy scare and then a little bit of relief off of that. But in terms of the fundamental picture, technicals, demand for stocks, and all the rest of it. ...

Interest Rate Trends - US government bond yields are decreasing despite discussions about long-term fiscal sustainability [1] - The yield curve is flattening, with two-year and ten-year Treasury yields approaching their lowest levels since early May [3] - Global markets may not always trade on fundamentals, contributing to a global trend of lower interest rates [2] Currency Dynamics - The dollar is weakening, reaching its lowest point since February 2022 [4] - The euro is strengthening against the dollar, reaching its strongest level since September 2021 [4] - The difference between the US 10-year yield and the German 10-year yield is approximately 163 basis points, the closest it has been since early April [3] Economic Implications - A weaker dollar benefits multinational corporations [4] - A stronger euro may pose challenges for the Eurozone economy, which is heavily reliant on exports [4] - The current US administration's budget, even if passed, may not significantly address the deficit in the short term [2]

Geopolitical & Economic Stance - The country's global image is improving [1] - Military action was taken to prevent a nation from acquiring nuclear weapons [1] - The country faces $9 trillion in debt obligations this year [1] - The government intends to address the debt by initially using short-term solutions, anticipating future interest rate reductions [1] - Trade policies will be influenced by how other countries treat the nation [1] - The country will implement tariffs ranging from 10% to 50% on goods from countries allowed to trade with the United States [1] Monetary Policy - The government expresses dissatisfaction with the current Federal Reserve leadership [1] - The government aims to appoint individuals to the Federal Reserve who will lower interest rates [1]

I honestly think that investors today are more rightly focused on our fiscal trajectory today than they were 10 12 years ago. I do think the the the deficit and fiscal picture is potentially much more risky is potentially at risk of crowding out investments and and consumption because of the push in interest rates higher from the types of debt and deficits that we're seeing. When I look at American history, I see examples of how our political system was able to come together and really uh change our fiscal ...

Economic Data & Monetary Policy - The Federal Reserve (Fed) acknowledges a slight degradation in the scope of economic surveys but expresses concern about the direction of travel regarding the accuracy and reliability of US economic measurement [4] - The Fed emphasizes the importance of accurate economic data for itself, Congress, and businesses to understand the state of the economy, including growth levels [4][5][6] - The Fed notes that current interest rates are at higher levels, providing significantly more room for cuts compared to periods of very low interest rates [15] Inflation & Tariffs - Retailers anticipate tariff-related inflation to become more apparent in future data, as current sales reflect inventory from previous months [8][9] - There is uncertainty regarding how much of the tariff impact will be passed on to consumers; the effect could be lower or higher than expected [10] - Companies may increase prices on non-tariffed goods to compensate for losses incurred due to tariffs on price-elastic goods [11][12] - The Fed acknowledges the possibility of companies increasing prices on necessities, even if not subject to tariffs, to offset losses from tariffed goods, as seen in past tariff episodes [12][13] Bureau of Labor Statistics (BLS) - Congress is considering a proposal to cut $56 million from the Bureau of Labor Statistics (BLS), raising concerns about the agency's ability to collect accurate data and provide reliable indicators [3]

Congressman, welcome back to the program, sir. Always good to hear from you. I'm going to start with a slightly provocative question.I'm paraphrasing here. Do you plan to work for this very term hotheaded person a little bit later this morning. Well, Jonathan, it's great to be with you.We look forward to having Chair Powell before the committee this morning. And I think he'll face questions on his outlook for inflation and therefore what his views are about rate cuts coming forward. I think that's the impor ...

Market Sentiment & Geopolitics - The market is currently overlooking geopolitical risks, inflation, and potential trade wars [12] - Market participants believe current uncertainty levels are manageable [5] - Closing the straits would be a significant market-moving event impacting crude oil and the S&P [2] Oil Price & Inflation - Oil prices are crucial for managing inflation and potentially enabling interest rate cuts [4] - A jump in Brent or WTI crude oil prices impacting consumer spending could negatively affect the market [3] - Crude oil being down 6% was unexpected given recent events [1] Federal Reserve (The Fed) & Interest Rates - The Fed's actions are currently more influential than other factors [7][8] - The market anticipates the Fed stepping in and potentially moving towards rate cuts, benefiting sectors that would gain from such a move [8][9] - Some voices suggest rate cuts may come sooner and be more frequent than previously anticipated [12] - The Fed seems comfortable with PCE (Personal Consumption Expenditures Price Index) at 31%, until the labor market weakens [7] - There's a possibility of yields approaching 5% due to ongoing concerns, even if the market is currently disregarding them [14]