Investor Caution Returns as U.S. Presses for Trade Deals

Let's get to the big story breakdown.

While Wall Street coming back from a holiday weekend in the red, we saw US stocks have its worst week in 3 weeks.

Now Trump announcing a 3 week extension on the deadline for new tariffs while reiterating that trading partners could still face higher rates if no deal is reached.

At least 14 countries are set to face steep blanket tariffs on their exports to the US starting on August 1st.

Now Treasury Secretary Besset says multiple.

Trade announcements are coming while Trump threaten a 10% tariffs on countries aligning with BRICS without naming specific policies.

And on the 4th of July, Trump signed a sweeping tax and spending bill into law.

He celebrated a narrow win just one day after the House passed the bill 218 to 214.

Well, joining us as the week gets underway is Michael Ryanking, senior market strategist here at the New York Stock Exchange.

Michael, good morning and welcome back.

From the holiday weekend.

Good morning, Remy.

Thanks for having me back.

Well, here we are.

We're back again with a trade and tariff center stage again.

So how do you factoring all of this into your analysis?

Yeah, absolutely.

So I mean I think yesterday markets were a little bit emblematic of how we all felt on a personal level coming back from the long weekend.

We had a little mini temper tantrum, you know, and that came in response to the increase or kind of the President Trump bringing tariffs right back to the forefront.

If you kind of take a step back, right?

I mean, the sell-off we had yesterday really just gave back what we got on Thursday in that half day of trading ahead of the kind of ahead of the weekend on the back of the better than feared jobs report, and then when you kind of take a look at the Uh, the details of what those tariff increases mean, it's really just an extension in large part we're now kind of extending the deadline out from July to August, and if you look at things countries like Japan and South Korea, their key imports.

The US are autos, right, those are subject to the sectoral tariffs, right?

And when you and the other key pieces is electronics markets which have also been sort of carved out.

So if you look at the like the effective tariff rate even on the back of this increase, it only goes up you know marginally.

And you mentioned the half day session we had last week ahead of the 4th of July holiday here in the US, and we got jobs figures last week, which we can't dismiss.

Of course we got ADP figures which showed negative growth at the same time, non-farm payrolls came in better than expected.

So how are you making sense of the labor market data?

Yes, so the labor market is a little bit sloppy, right?

So if you look.

The non-farm payrolls number, right, the private sector hiring hit the lowest level since last October.

There was a big jump in federal hiring or government hiring, not at the federal level.

It happened at the state level and state and education.

So there's probably some sort of seasonal adjustment that is within that number that made up for about 7.

000 of the call in 140,000 jobs right so if you kind of back that out, right, the number was a little bit, you know, kind of more modest than what we'd seen.

We've seen the unemployment rate tick lower, you know, part of that has to do with kind of the shrinking of the labor force and some of the kind of the unwind of what we'd seen last year as we're seeing kind of a foreign born.

Um, kind of workforce is shrinking as part of the kind of border security of the administration, and we know when it comes to the central bank of the US Fed Reserve Chair Jay Powell has a tough task, but where is this so-called greater clarity going to come for Powell?

Well, unfortunately that greater clarity has actually gotten more clouded as of yesterday, right, because if you think about kind of the sequencing, the Federal Reserve wanted to see the impact of tariffs for some period of time before moving.

Now we've once again kind of pushed out the deadline from, you know, this month to next month and you've even heard Treasury Secretary Besson suggesting that we could be wrapped.

With trade around kind of Labor Day, right, so that now I think starts to put September meeting a little bit into question, right, where they still because they still want to see what the impact on inflation is and we're not going to necessarily kind of have answers to that, that could shift if we start to see the labor market data really deteriorate in a significant way between now and then.

Yeah, and also to keep in mind the big beautiful bill, what are the implications of that for the US economy?

Yeah, look, I think you know it's, it's a positive, you know, kind of from, from, you know, kind of removing that overhang.

I think there's a good shot that we start to see kind of a pickup in capital investment once this trades once we kind of get past trade, kind of given the deduction of the language, the deduction.

Language within the within the bill you do remove this big overhang of the over kind of the one overhang that you continue to have here is just the continuation of growing deficits.

We're once again seeing some volatility in the Japanese long duration markets which we had talked about about a month ago which led to a little bit of volatility here.

We've seen a very sharp move higher there.

As there's some concerns ahead of elections, you know, kind of later this month, right, we've that that's happened over the last couple of days.

We're into kind of treasury auctions and there's a 20 year JGB auction this evening, right, so auctions are going to come back into focus.

So you have to kind of pay attention to kind of the treasury markets and how that and how those markets shape up.

Yes, and Michael, that brings me to my final question.

When it comes to the US. bond market for the 10 year yields and also for the S&P 500, what levels are you paying attention to?

Yeah, so I mean I think when you look at the S&P 500 we just pushed to fresh highs, right, so what you kind of want to see is, you know, even if there's some consolidation, you want to hold kind of in the upper third of the range that you just kind of just broke out from, right?

So you kind of want to breaking above 6000 was really.

Kind of where we started to pick up some momentum, so you know kind of holding in that 6150, 6200 range on a pull back here would be pretty positive.

And in terms of in terms of kind of the 10 year that 4.5% level always seems to be kind of a level that markets pay attention to.

OK, Mike, as always, great having you on the show.

Thank you so much for joining me and thank you for sharing your insights.

Thanks for having me.

See you next week.

See you.