The US Jobs Report And The Investing Week Ahead

ve – economists forecast 130,000 new jobs and the unemployment rate to hold steady at 4.3%. A strong jobs market should offer some relief for consumers, who’ve been squeezed by higher prices driven by the war in Iran and the resulting oil shock. Consumer sentiment in early June had already picked up from May’s record low levels and that might continue to improve as prices at the pump continue to fall.

Even so, markets still expect the Federal Reserve (Fed) to hike interest rates later this year. At his first press conference on June 17th, the new Fed chair made it clear that bringing inflation back to its 2% target remains the top priority. And with inflation running somewhere north of 4%, a rate hike seems justified.

With energy prices already back down to pre-war levels, those inflation fears may prove to be overhyped. But then again, higher energy prices have only been one driver of inflation – and there’s a risk that the drop in energy prices may act as a boost to an already overheating economy. That kind of pressure may force the Fed to raise rates, even if that means risking a few market fireworks of their own.

On The Calendar

• Monday: Japan retail sales (May).
• Tuesday: Japan employment (May), China PMI (June), Japan industrial production (May), US Chicago PMI (June), US job opening and labor survey (May). Earnings: Nike.
• Wednesday: Japan Tankan (business) survey (2nd quarter), eurozone inflation (June), eurozone manufacturing PMI (July), US ISM manufacturing (July).
• Thursday: US employment (June), US factory orders (June).
• Friday: US markets are closed (for BBQs and big bangs) ahead of the Fourth of July weekend.

What You Might’ve Missed Last Week

Global

• Oil prices fell around 10% as flows through the Strait of Hormuz picked up.

US

• The Fed’s preferred inflation measure came in at 4.1%, the highest in three years.
• The US president looked to boost America’s quantum computing industry.
• Micron’s stellar results and outlook renewed belief in the AI boom.

Asia

• SK Hynix announced plans to raise $29 billion with a Nasdaq listing.

Why It Matters

Oil prices fell around 10% over the week as tankers once again steamed through the Strait of Hormuz, and exports from the Gulf region climbed back to nearly two-thirds of pre-crisis levels. Crude has now reversed almost all those war-induced gains, and lower energy prices should calm inflationary jitters, bring down prices at the pump, and give consumer confidence a lift.

The Federal Reserve’s favorite inflation measure is the personal consumption expenditures (PCE), which covers a broader range of items and adjusts for how folks actually spend. May’s PCE inflation figure came in at 4.1% over last year – a steady uptick from April’s 3.8% and the fastest pace in over three years. Meanwhile, “core” PCE – which strips out volatile food and energy prices – rose 3.4% to hit its highest level since October 2023. The good news is that this inflation’s main driver – those higher oil prices – is easing. The bad news is that it looks like another global economic risk is on its way: El Niño.

The American president signed two executive orders this week, aimed at turbocharging the quantum computing industry. One aims to direct federal agencies to work with academics and the private sector to build a quantum machine capable of performing scientific research, and the other brought forward the deadline to “quantum-proof” government systems from 2035 to 2031.

Micron, one of the world’s biggest memory-chip makers, reported results and a profit outlook that topped analysts’ expectations – and its shares rocketed to a record high. What’s more, the company’s CEO said that “very large” customers are entering into longer-term supply agreements and that demand would exceed supply into 2028. That boosted investor confidence big time, fueling conviction that memory companies are well-positioned to profit from the AI boom.

And speaking of memory-makers, South Korean chip giant SK Hynix is the go-to supplier of high-bandwidth memory to Nvidia and other AI big spenders. Now it’s looking to cash in on the AI gold rush with plans to raise around $29 billion by listing an American Depositary Receipt (ADR) on the Nasdaq. An ADR lets US and global investors use US dollars to buy into foreign firms on American exchanges, opening the company up to a deeper pool of capital. Expect trading to start on July 10th.