Global Markets – Employment, Rates, Equities, Trade Tensions

05/07/2025

📌 Macroeconomy: Strong Job Market, Bullish Equities, Tariff Risks Ahead

U.S. Employment
- Early-week ADP data disappointed, raising concerns about a potential slowdown.
- However, official job creation figures exceeded expectations, restoring confidence in the strength of the U.S. labor market.
Market Reaction
- Interest rates moved higher, with investors anticipating a more restrictive monetary stance in the medium term.
- Equity indices advanced, especially in the U.S., where new record highs were reached.
Looking Ahead
- Tariff Risk: The grace period for bilateral trade negotiations is nearing its end (deadline: July 9), reviving concerns over potential trade tensions.
- Markets are bracing for possible increased volatility, though current bullish momentum remains intact.

General Sentiment: Cautious optimism — markets remain resilient on the back of strong jobs data and earnings, but looming risks (tariffs, interest rates) warrant vigilance.

For Conservative Investors:
- Strengthen positions in defensive sectors (e.g., healthcare, consumer staples).
- Avoid sectors highly exposed to trade flows (e.g., semiconductors, autos).
For Opportunistic Investors:
- Capitalize on strong momentum in U.S. equity markets.
- Selectively allocate to sectors tied to employment and domestic consumption (e.g., services, tech).
On Rates & FX:
- Expect gradual increases in bond yields.
- Consider tactical positioning on the U.S. dollar, particularly if the Fed maintains a hawkish tone.

Financial markets are benefiting from a robust economic backdrop, especially in labor markets.
Imminent trade tensions represent the primary short-term risk.
Recommended strategy: Maintain moderate equity exposure, diversify geographically, and monitor sectors sensitive to trade and monetary policy developments.