New records as jobs are scanned, Tesla jumps

(Reuters) – A day-ahead look at North American and global markets by Mike Dolan

Federal Reserve Chairman Jerome Powell managed to smooth out some election issues in bond markets on Tuesday, helping Wall St stocks return to all-time highs as a series of labor market polls are due before the break. of July 4th.

As the Nasdaq broke new records and the S&P 500 closed above 5,500 for the first time, Tesla stole the show – rising 10% to its highest level since January after reporting a smaller-than-expected drop in 5% on vehicle deliveries in the second quarter.

Shares of the auto giant, the only stock in the so-called “Magnificent 7” of U.S. megacaps that is still in the red for the year, rose another 3% before the bell on Wednesday.

US Treasuries, which were hit earlier this week by rising bets on Donald Trump’s return to the White House and the tax implications of his campaign promises, have calmed somewhat since Powell spoke in Portugal on Tuesday.

Ten-year yields fell to 4.43% from peaks near 4.5% reached on Monday – as betting markets boosted former President Trump’s chances of defeating incumbent Joe Biden in November to more than 60% after Biden’s dismal performance in the TV debate last week.

As a result, the still-inverted U.S. Treasury yield curves became steeper in the new week, as the New York Fed’s estimate of the 10-year term premium demanded by investors to maintain long-term government debt returned. to be positive for only the third time this year.

While not yet signaling any rush to cut interest rates, Powell gave markets some encouraging noises by saying the United States is back on a “disinflationary path.”

Part of his discussion was how the Fed needs to maintain a balance between supporting the economy and containing inflation – something relevant in a week in which we see more signs of slowing growth and with critical readings of the labor market.

However, an unexpected jump in U.S. job openings in May went slightly off script — even though it’s a month older than most of this week’s jobs reports.

Wednesday we see ADP’s private sector jobs data for June, weekly unemployment claims and layoffs data for June – along with service sector surveys for last month as well.

And all of this precedes the release of the minutes of the Fed’s latest policy meeting.

The flood of data comes at a time when trading is expected to slow ahead of Thursday’s holiday.

Wall Street futures remained steady ahead of the open and the dollar index was slightly more supportive – especially against the euro and pound sterling as the British and French elections unfolded throughout the rest of the week.

The story continues

With tactical voting and positioning in the second round of French legislative elections on Sunday now set to avoid an overall majority for the far right, French government debt premiums on Germany have fallen below 70 basis points for the first time since mid-2019. June.

In Asia, however, the story was different – with the dollar reaching new 38-year highs, just below 162 Japanese yen – without any intervention from the Japanese authorities yet – and 2024 highs against China’s yuan.

The latter was hit by June’s surprisingly weak services sector survey, which also hit mainland Chinese stocks – now up less than 1% for the year.

Key developments expected to provide further guidance to US markets later on Tuesday:

* U.S. June ADP private sector jobs report, weekly jobless claims, June Challenger layoffs, June ISM and S&P Global services sector survey, May factory goods orders, international trade balance of May; Canada’s trade balance in May

* Federal Reserve issues minutes of last policy meeting; New York Federal Reserve President John Williams, European Central Bank President Christine Lagarde and ECB Chief Economist Philip Lane speak at the ECB’s annual forum in Sintra, Portugal

* US Corporate Profits: Constellation Brands

* 4-week US Treasury bill auction

(Reporting by Mike Dolan, editing by XXXX mike.dolan@thomsonreuters.com)