In a week dominated by noisy political headlines, markets showed signs of recalibrating their attention toward economic fundamentals — at least for now. While the backdrop remains volatile and vulnerable to disruption, investors appeared to place more weight on measurable signals like job growth, inflation and earnings than on the muddling or speculative buzz dominating the news cycle.
Labor Market Holds Steady—Just Enough to Reassure
Nonfarm payrolls rose by 139,000 in May—slightly below April’s revised 147,000 but still within a healthy range.
The unemployment rate held at 4.2%, continuing a year-long trend of stability.
Though hiring has cooled from the 200,000-plus monthly pace seen in 2023, the resilience of the labor market in the face of policy turbulence helped calm fears of a near-term recession.
Equity Markets Catch Their Breath
The equity market responded positively to the labor report, with the S&P 500 gaining 1.5% on the week and closing above the 6,000 mark—its highest since the late-April correction. While still shy of the all-time high of 6,144 set in February, the recovery indicates that investors are willing to look beyond the latest headlines and refocus on earnings strength and broader economic data.
Notably, a highly anticipated phone call between President Trump and President Xi of China received little market reaction—suggesting that investors may be starting to discount the day-to-day noise in favor of longer-term fundamentals.
Treasury Yields Begin to Normalize
In fixed income markets, yields moved into a more traditional configuration:
- 2-Year Notes: approximately 4%
- 10-Year Notes: approximately 4.5%
- 30-Year Bonds: approximately 5%
This upward-sloping structure based on note and bond maturity dates marks a normalization of the yield curve after an extended period of inversion. Early in the week, yields dipped on concerns about soft employment data, but Friday’s report helped reset expectations.
While the White House has renewed calls for a 100-basis-point rate cut, the Federal Reserve continues to take a data-dependent approach. With the labor market holding and inflation still above target, Fed officials appear in no rush to ease further.
Apple at a Crossroads
Amid ongoing trade uncertainty, Apple has come under pressure. With shares down over 18% year-to-date, the company has dropped behind Microsoft and Nvidia in market capitalization. Tariff threats targeting non-U.S.-manufactured iPhones have contributed to the pressure.
This week’s Worldwide Developers Conference (WWDC) offers Apple a chance to shift the conversation, with announcements expected around artificial intelligence. For investors, the event may serve as a referendum on Apple’s innovation roadmap—and its ability to regain leadership in a fast-evolving market.
Looking Ahead: CPI and the Tariff Effect
This Wednesday’s release of the Consumer Price Index (CPI) will offer a first glimpse at how recent tariffs may be affecting inflation. Core CPI is expected to show a 2.9% year-over-year increase—still notably above the Federal Reserve’s 2% target.
If inflation continues to run hot, it could reinforce the Fed’s cautious posture. But if price pressures are easing despite the tariff headwinds, that could give investors greater confidence in the durability of the recovery.
Closing Thoughts
While markets remain sensitive to policy shifts and media noise, the past week offered something quieter and welcomed: a moment when fundamentals reclaimed some influence over investor behavior. That’s not a guarantee of smooth sailing ahead, but it’s a reminder that signals like jobs, inflation and earnings still matter.
At Elevage Partners, we believe long-term strategy should be built on discernment—not distraction. As we enter a data-heavy stretch, we continue to monitor what’s real, what’s reactive, and what may ultimately shape outcomes for investors.
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