**Increased Non-Farm Payrolls and Signs of Economic Confidence** Walmart is seeing steady consumer activity, and the White House has no plans for a call between Trump and Musk. Meanwhile, Fed’s Harker mentioned that rate cuts could be on the table later this year. In the markets, gold fell by $40 to $3,313, US 10-year yields rose by 11 basis points to 4.50%, and WTI crude oil increased by $1.28 to $64.65. The S&P 500 gained 1.1%, while the USD strengthened and the JPY weakened. The market reacted positively to the non-farm payrolls, showing some underlying tension leading up to their release. Good news about US-China trade likely influenced this sentiment. After the jobs report, Fed funds pricing for April 2026 dropped by 10 basis points to 70 basis points, which boosted the dollar. The USD/JPY approached peak levels for the week, while the dollar made modest gains of 25-35 pips across the board. ## Recent Employment Data in Focus Recent employment data from the US and Canada were better than expected. The US non-farm payrolls rose by 139,000 in April, exceeding the expectation by about 9,000 jobs, lifting cautious sentiment into a more confident outlook. Similarly, Canada saw a surprising increase of 8,800 jobs in May when a decrease was anticipated, giving local markets something to react to. Harker’s comments about possible interest rate cuts later this year carry more weight now, especially as the US 10-year note yield rose above 4.50%. Typically, such a rise would dampen dovish speculation, but instead, it highlighted a gap between current bond market conditions and future projections. The drop in Fed funds pricing for April 2026 to 70 basis points suggested a shift in expectations that was hard to ignore—not just for immediate reactions, but also for where money is expected to be two years from now. The increase in USD/JPY towards weekly highs showed strong buying right after the payrolls were released. This wasn’t a broad dollar rally, but it indicated where buyers were most focused. The dollar index saw gains of 25 to 35 pips that were steady yet measured, reflecting a cautious risk appetite. This is understandable as equity strength was selective; the S&P 500 rose by 1.1%, but gold decreased by $40 to $3,313, and oil went up by $1.28 to $64.65, likely driven by internal supply and demand factors rather than speculative actions. Company news and geopolitical developments influenced market flows. Potential trade talks between American and Chinese representatives in London added to the sentiment that fundamentals might change ahead of key data. With China issuing rare earth licenses, seen as a move towards cooperation with major automakers, there was more momentum following the payroll report. ## Market Response to Economic Indicators Currently, we are witnessing a reset, with traders reducing holdings where prices had become extreme before data surprises. For those focused on rates or volatility, the collective message from bonds, currencies, and oil is clear: while short-term surprises drive immediate moves, longer-term contracts are beginning to price in a different outlook for the latter half of the year. Given recent trends, we expect changes in dollar funding and implied rates to be significant for traders with medium-duration strategies. What’s important now is to monitor the strength of buying in USD assets beyond the initial reaction. The employment data has recalibrated expectations rather than thrilling them. If the dollar continues to attract demand based on moderate surprises, particularly against currencies with more passive central banks, the trade may still hold despite cautious sentiment. It’s this clarity in transactions, along with subtle adjustments in forward rates, that should provide the best insight into current liquidity positioning. While we haven’t seen a sharp reversal, conviction is not stagnant. It’s evolving, as it typically does when the market is caught slightly off guard. Create your live VT Markets account and start trading now.

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