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The Economic Calendar:
MONDAY: Chicago PMI (8:45a CT), Fed Bostic Speech (9:00a CT), Dallas Fed Manufacturing Index (9:30a CT), Quarterly Grain Stocks (11:00a CT), Fed Goolsbee Speech (12:00p CT)
TUESDAY: LMI Logistics Managers Index (5:00a CT), Redbook (7:55a CT), Fed Chair Powell Speech (8:30a CT), S&P Global Manufacturing PMI (8:45a CT), Construction Spending (9:00a CT), ISM Manufacturing Index (9:00a CT), JOLTs (9:00a CT), Dallas Fed Services Index (9:30a CT)
WEDNESDAY: MBA Mortgage Applications (6:00a CT), Challenger Job Cuts (6:30a CT), ADP Employment Change (7:15a CT), Total Vehicle Sales (9:00a CT), EIA Petroleum Status Report (9:30a CT)
THURSDAY: June Jobs Report (7:30a CT), S&P Global Composite PMI (8:45a CT), Factory Orders (9:00a CT), ISM Services Index (9:00a CT), EIA Natural Gas Report (9:30a CT), Fed Bostic Speech (10:00a CT), Baker Hughes Rig Count (12:00p CT)
FRIDAY: Independence Day Holiday – U.S. Markets Closed
Key Events:
Due to the Independence Day market holidays, June U.S. Nonfarm Payrolls are expected to be released on Thursday rather than Friday.
The consensus forecast is for the U.S. economy to add 129,000 nonfarm payrolls in June, a decrease from the previous month’s 139,000 and below the 3-month (135k) average. The unemployment rate is projected to remain unchanged at 4.2%.
Source: Trading Economics
Wall Street concluded its best week since mid-May on Friday, with the benchmark S&P 500 index notching a new intraday peak and a record close for the first time since February. The return for last week was 3.07%, and returns were 5.07% for June.
This resurgence in sentiment was primarily driven by the resolution of a 12-day conflict between Israel and Iran, contributing to a notable decline in oil prices.
We view the upcoming Q2 2025 earnings season as one of the next major market catalysts. The season is set to begin in the coming weeks. Earnings estimates for Q2 have been revised lower—down 4.1% since the end of Q1. Ten of the eleven S&P 500 sectors have seen downward revisions, with Communication Services being the only sector to show improvement.
However, it’s important to remember that earnings results often exceed expectations. Over the past five years, the S&P 500 has delivered an average earnings surprise of 9.2%. Despite the recent moderation in forecasts, earnings growth is still expected to remain positive, with current consensus estimates pointing to a 4.8% year-over-year increase. The Technology and Communication Services sectors are leading the way, both of which continue to benefit from strong secular tailwinds.
Source: X.com
Time to Sell??? A chorus of bearish voices is emerging, questioning the sustainability of the current rally. UBS proprietary trader Rebecca Cheong has joined this sentiment, warning that despite a recent “violent short squeeze” that saw its internal UBXXSHRT index surge by 43%, the firm’s proprietary 4M Intraday Recovery Score—an indicator of discretionary risk appetite—continued its decline until turning neutral on June 18.
Cheong concludes that this presents a “risky setup,” particularly as short covering appears to have gone too far, leading to under-hedged positioning in large-cap technology stocks. From a flow perspective, beyond the excess sell flow observed post-war news, real-money accounts, including retail investors, foreigners, and pension funds, are estimated to be net sellers, without the usual support from corporate buybacks. While this anticipated sell flow and under-hedged positioning suggest a near-term bearish outlook, the generally low systematic exposures imply that any sell-off would likely be gradual rather than abrupt, unless triggered by a more extreme external shock such as further escalated conflict.
Cheong further elaborates that UBS’s warning is rooted in observations of past short squeeze episodes that were subsequently followed by market declines. The analysis also points to other market indicators, including a cooling trend in European equities, a bearish outlook for oil prices driven by robust supply, and the quiet but steady ascent of the Artificial Intelligence sector.
Despite the cautious stance, the report notes that sentiment and positioning metrics were already depressed, with hedge funds and quantitative funds maintaining light long positions, potentially limiting the scope for an unwind-driven panic.
ES Futures Chart 06-29-2025
Crude oil futures experienced a significant decline last week, falling by 10.2%.
This sharp drop follows a truce that concluded 12 days of intense conflict between Israel and Iran, which had included U.S. airstrikes on Iranian nuclear facilities and retaliatory missile launches.
Although both sides exchanged accusations of violations in the immediate aftermath of the announcement, the overarching sentiment has shifted towards de-escalation.
Consequently, the immediate threat to the critical Strait of Hormuz, a chokepoint for 20% of the world’s oil supply, appears to have receded, leading to a tumble in oil prices and a surge in broader risk appetite.
Source: TradingView
Treasury yields are currently steady to softer, with the 10-year Treasury yield trading at 4.28%. This aligns with a returning risk appetite as immediate geopolitical concerns appear to recede, placing renewed focus on the Fed’s next moves.
In his semiannual monetary policy report to Congress, Federal Reserve Chair Jerome Powell reaffirmed the central bank’s “wait-and-see” approach. Powell notably avoided echoing recent speculation from Governors Michelle Bowman and Christopher Waller, who had hinted at potential rate cuts as early as the July FOMC meeting.
Market expectations have seen a dovish shift recently, with futures now pricing in approximately 63 basis points of rate cuts for the remainder of 2025. While the odds of a July cut have ticked up as high as 25%, the consensus among traders points to September as the more probable starting point for policy easing.
The markets were shaped by weather, technical trading, and the anticipation of the USDA’s acreage and quarterly stocks reports. Corn and soybeans found support from bargain buying, while wheat faced pressure from ample global supplies and harvest expectations.
Source: TradingView
DXY is accelerating down, making new 3-year lows.
Source: X.com
President Trump is reportedly considering naming a successor to Federal Reserve Chair Jerome Powell months ahead of the typical timeline, with a decision coming as early as September or October. Well before Powell’s term expiration in May 2026, such a move could effectively establish a “shadow Fed chair”—a chair-in-waiting who might begin influencing market expectations even before formally assuming leadership.
The rumor mill for potential candidates includes notable figures such as Kevin Warsh, Kevin Hassett, Scott Bessent, David Malpass, and Christopher Waller.
The market’s reaction to the speculation has been largely dovish. Traders are betting that a Trump-aligned Fed appointee would advocate for earlier and more aggressive interest rate cuts, particularly given President Trump’s continued public criticism of Powell for his perceived slow pace on monetary easing.
Bitcoin, currently trading approximately 5% below its May record high of around $112,000, is navigating remarkably calm market conditions. This relative tranquility contrasts with the cryptocurrency’s history, which has been defined by extreme price swings since its inception in 2009.
Yet, a significant shift in Bitcoin’s volatility profile has emerged over the past year. According to Bloomberg’s Eric Balchunas, the ratio of IBIT’s Bitcoin ETF 60-day volatility to the S&P 500 has plummeted. A year ago, Bitcoin was 5.7 times more volatile than U.S. stocks; now, that ratio is barely over 1, indicating a similar level of volatility to traditional equities.
This normalization of volatility presents a dilemma for some “hardcore bitcoiners,” who have historically embraced the asset’s dramatic price swings as a fundamental characteristic, often viewing chaos as a feature rather than a bug. Balchunas’s observations, however, prompt an intriguing question about how this change will reshape the investment landscape for cryptocurrency.
Source: Bloomberg
The Federal Reserve’s “dot plot,” a key component of its communication strategy, provides individual projections from Federal Open Market Committee (FOMC) members on the future path of the federal funds rate.
Currently, most of these projections cluster around present rate levels or indicate just one full rate cut by year-end. While a few outlier dots suggest the possibility of multiple cuts if inflation cools more rapidly and economic growth disappoints, these do not represent the committee’s consensus view.
