Traders pile into Treasuries ahead of an inflation reading.

Bonds gain | The world’s largest bond market rose after the latest batch of economic reports reinforced speculation that the Federal Reserve will be able to cut interest rates this year to prevent a bigger US slowdown. Traders gearing up for the Fed’s favored inflation gauge piled into Treasuries as several data points illustrated a downshift in growth tied to the central bank’s higher-for-longer stance. Treasury 10-year yields fell four basis points to 4.29%. A $44 billion sale of seven-year notes saw solid demand. Swap markets are pricing in about 45 basis points of easing in 2024, which would equate to less than two quarter-point cuts. The S&P 500 fluctuated around 5,480. In late trading, Nike dropped after sales missed estimates. 

Wall Street traders show signs of fatigue on stock buying.

Buyer exhaustion | US stocks retreated after a rally to all-time highs spurred calls for a near-term pullback amid signs of buyer fatigue. The S&P 500 briefly topped 5,500 before losing traction. The high-flying tech group came under pressure, with the Nasdaq 100 down after a seven-day advance. But bulls remain. According to Stifel’s Barry Bannister, the S&P 500 may rally to the 6,000 mark before the end of 2024, if past market manias are any guide. However, like prior “bubble” episodes, this one eventually has to pop, also. By mid-2026, Stifel expects the gauge to sink back to where it began this year — around the 4,800 level — erasing a fifth of its value. Wall Street is gearing up for a quarterly event known as “triple witching” that will see some $5.5 trillion worth of options tied to indexes, stocks, and ETFs fall off the board, according to an estimate from SpotGamma.

BOJ prepares to deliver a policy decision.

Japan’s turn | It’s the Bank of Japan’s turn to deliver a policy decision two days after the Federal Reserve. Japanese policymakers are widely expected to reduce bond purchases while holding the benchmark rate in a range between 0 and 0.1%. More than half of the economists surveyed by Bloomberg said the BOJ will slow the pace of bond buying from roughly ¥6 trillion ($38.2 billion) per month. That would be its first clear step toward quantitative tightening after it ended its massive stimulus program in March.

US equities, bonds lose steam before jobs report.

Awaiting jobs report | US equities and bonds lost steam on the eve of a key jobs reading that will help shape the outlook for the Federal Reserve’s next steps. Stocks stalled near all-time highs as traders refrained from big bets. Treasuries wavered. The euro rose as the European Central Bank raised inflation forecasts after cutting rates. In the run-up to the payrolls reading, Wall Street waded through a slew of data. Jobless claims topped estimates, labor costs increased by less than previously reported, and the trade deficit widened. Friday’s report is expected to show that the US added 180,000 jobs in May while the unemployment rate held steady. Bloomberg Economics expects the report to present contradictory views of the labor market: The establishment survey may show robust gains in nonfarm payrolls, while the household survey likely will show the unemployment rate ticking up.