The US added 139,000 new jobs in May, surpassing expectations. However, the more significant issue lies in the bond market.
An unusual occurrence is unfolding in the bond sector, with Treasury yields rising sharply and the dollar decreasing in value. This combination is quite rare and indicates worries about future inflation.
The trade wars persist, with a federal court recently overturning some tariffs; the administration plans to appeal this decision. Additionally, the EU has until July 9 to reach an agreement, or else 50 percent tariffs will be imposed. Consequently, many businesses are adopting a defensive stance rather than pursuing growth.
The debt crisis is escalating, with the national debt at $36.2 trillion—this surpasses the debt percentage relative to our economy that we faced at the end of World War II. Moody's has downgraded our credit rating. We're not alone in this issue; Britain's bonds are at their highest levels since 1998.
Changes to accredited investor rules could be on the horizon. Currently, an individual needs an income of $200,000 ($300,000 for couples) or a net worth of $1 million to access private markets. These thresholds have remained unchanged since 1982, despite inflation adjustments indicating that $200,000 would equate to $662,000 today.
The SEC might begin to ease its enforcement of the accredited investor criteria, potentially granting access to more investment opportunities for individuals who have been excluded for years.
The cryptocurrency market is stabilizing, with the SEC dropping its cases against Coinbase and stepping back from categorizing most cryptocurrencies as securities. Bitcoin is nearing its all-time highs, and the US is continuing to expand its strategic Bitcoin reserve.
The House has recently passed the legislation dubbed the "One Big Beautiful Bill," which extends the 2017 tax cuts and removes taxes on tips and overtime. According to the Congressional Budget Office, this will add $2.4 trillion to the deficit over the next decade. This development has ignited discussions between deficit-conscious lawmakers and those advocating for growth, including a particularly well-publicized debate that has made headlines.
Consumer sentiment remains low, matching the levels of 2022. People are anticipating 6.6 percent inflation, while the actual inflation rate is 2.3 percent. The discrepancy between public perception and the reported data is evident in various areas.
We cover all of this in today’s First Friday economic update.
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In May, the US created 139,000 new jobs, surpassing expectations. However, the key issue lies not in the employment figures but rather in the bond market.