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Happy Friday, investors. Markets react immediately even to incremental changes in economic data, and we saw that in two contradictory ways Thursday. Soft jobs data led to traders repositioning for rate cuts this summer, but the stock market also came within inches of a new record high.

Here we go.

Double the odds for cuts

Everyday Americans are struggling more and more to find jobs, and that’s led markets to ramp up bets for the Federal Reserve to cut rates this summer.

The Department of Labor announced Thursday that continuing claims climbed to 1.974 million in the week to June 14, above the 1.937 million seen the week prior. 

It’s the highest mark since the end of 2021, and underscores the tight monetary policy that has put pressure on employers and job-seekers.

The rise in continuing claims combined with the steadiness of initial claims suggests that hiring is slowing down even though firing hasn’t picked up.

Traders took the numbers as reason to raise their expectations for rate cuts. According to CME data late Thursday, markets see 22.7% odds that the Fed makes a 25-basis-point cut in July, nearly double the 12% seen a week ago. 

For September, markets see 20.8% odds that interest rates will be 50 basis points lower than current levels, versus just 7.5% odds a week ago.

Traders on the prediction platform Kalshi, meanwhile, also ramped up their odds for two rate cuts in 2025.

The Fed has insisted all year that it’s not time to cut interest rates yet on account of tariff uncertainty.

However, as Opening Bell Daily has maintained for several months, the labor market data justify lower rates — as do the five consecutive months of cooler-than-expected inflation reports.

Case in point, the 10-year Treasury yield fell Thursday, reflecting a bond market that has become slightly less sure of the economy’s resilience.  

Fed Governors Christopher Waller and Michelle Bowman have both signaled in recent days that a July rate cut is on the table, though Fed Chair Jerome Powell has not indicated the same.

Rather, in his two days of testimony this week, Powell reiterated that tariff-related uncertainty continues to be reason for patience.

“I think we’ve got room to bring [rates] down, and then we can kind of see what happens with inflation,” Waller said last week on CNBC, adding that policy decisions should be based on data, rather than speculation. 

Market snapshot

Elsewhere

🔒️ Trump’s top economist says tariffs are here to stay. Economic Advisers chairman Stephen Miran said after all the deals are complete, the aggregate tariff rate may not fall much below the current 10% universal tariff. Some countries will be far below or above, he said. (Yahoo Finance)

🏦 The Fed still has time to wait and see what tariffs do to the economy. That’s according to Fed Governor Michael Barr, who said Thursday that he wants to wait for more data before making rate cuts. In his view, tariffs will put upward pressure on inflation. (Reuters)

📊AI is doing 30-50% of the work at Salesforce. That’s according to CEO Marc Benioff, who touted new technology as super-charging efficiency at the company. He estimated that AI at his company has reached about 93% accuracy. (CNBC)

Rapid-fire

• GDP contracted at a 0.5% seasonally-adjusted, inflation-adjusted rate in the first quarter, more than previously thought (WSJ)

• Mortgage rates have dropped below 6.8% for the first time since May (Yahoo Finance)

• The US dollar is hovering at its lowest level since 2023 (WSJ)

• Student loan borrowers face a “default cliff” as late payments climb (CNBC)

• Micron beat earnings estimates but the stock dipped more than 2% (Barron’s)

• Real-world, high-effort initiatives have become asymmetric bets in the digital age (Blog)

• Nike reported stronger than expected earnings and said tariffs will cost it $1 billion before price increases (CNBC)

• Trump Media stock has lost nearly half its market value since Election Day (CNN Business)

• The stock market has completely ignored the wall of worry (Opening Bell Daily)

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About me

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.

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