US private sector sheds jobs in June

Private sector payrolls declined in June according to the latest data from ADP. There was a drop of 33k jobs last month, the first monthly decline in over two years though the drop seems to have been driven more by firms not replacing departing workers rather than outright layoffs. The official nonfarm payrolls data is due out later today and is expected to show more than 100k of jobs being added in June with the unemployment rate holding steady.

US President Donald Trump amped up his criticisms of Fed chair Jerome Powell, calling on him to “resign immediately” in social media posts. Chair Powell’s term is due to expire in May 2026 though he could stay on as governor until 2028. In his comments at the Sintra central banking conference earlier this week, Powell appeared committed to staying in his role and noting that the Fed would continue to respond to data in setting its rates trajectory.

Saudi Arabia and Indonesia have reportedly agreed a USD 27bn bilateral investment pact to focus on private sector investments in clean energy, petrochemicals and aviation.

Dubai Land Department and the Department of Economy and Tourism have launched an initiative to support first-time buyers in the Dubai property market including priority access to new project launches and flexible payments. The scheme has the cooperation of several developers across the emirate including Emaar, Nakheel, Wasl and Dubai Properties among others as well as participation from five banks.

The China Caixin services PMI was weaker than expected for June at 50.6, down from 51.1 a month earlier and below market expectations. The headline composite index improved, however, to 51.3 thanks to a meaningful improvement in the manufacturing PMI.

Today’s Economic Data and Events

08:15 KSA S&P Global PMI June

11:00 TU CPI y/y June: forecast 35.25%

16:30 US change in nonfarm payrolls June: forecast 106k

16:30 US unemployment rate June: forecast 4.3%

18:00 US ISM services June: forecast 50.6

Fixed Income

It was a fairly choppy day in US Treasury markets overnight though within relatively tight bands. Yields on the 2yr UST closed higher by a bit more than 1bps at 3.7848% while the 10yr yield added more than 3bps to 4.2769%. Markets are adding on to rate cut expectations following the ADP employment report with 67bps of total easing priced in by end of the year.

It was a quiet and mixed session in GCC markets with a headline index of GCC credit flat overnight. Modest dips in sovereign and investment grade bonds were offset by pulls higher in high-yield and sukuk. Most countries showed higher bond prices overnight.

Qatar Commercial Bank is pricing a benchmark USD 5yr Formosa bond at SOFR+130. National Bank of Kuwait priced a USD 800m perp AT1 at 6.375%.

FX

In currency markets the main mover was sterling which fell by 0.8% following debate in the House of Commons where UK Prime Minister Keir Starmer wavered on supporting Chancellor Rachel Reeves. The pound fell to 1.3636 and while it was a sharp single-day move, sterling still remains up nearly 9% since the start of the year. Among other currencies the moves were less pronounced. EURUSD close at 1.1799, modestly lower, while both USDJPY and USDCHF edged higher.

In commodity currency markets CAD pulled stronger with a drop in USDCAD of 0.4% at 1.359 while AUD was flat.

Turkish lira strengthened by 0.15% overnight to 39.781 while the Indian rupee lost ground.

Equities

In the US equity markets had another mixed session though the overnight moves reversed some of the prior day's action. The Dow Jones edged marginally lower while the S&P 500 gained 0.5% and the NASDAQ rallied 0.9%. In Europe, the Euro Stoxx index added 0.7% while the FTSE closed lower by 0.1%.

UAE equity markets closed weaker overnight with the DFM down 0.4% while the ADX closed lower by 0.2%. The Tadawul by contrast managed to nudge higher.

Commodities

Oil prices had a strong lift overnight with both Brent and WTI rising by 3% to USD 69.11/b and USD 67.45/b respectively. The gains come in spite of a bearish EIA report which showed a build in US stockpiles of more than 4m bbl and builds in gasoline inventories. Overall US oil production was essentially unchanged at 13.43m b/d while product supplied was steady at 20.5m b/d.