Week Of: 07/06/2026

 07-02-26 10:54am Financial markets continued to be sensitive to energy prices this week, but oil prices remained relatively stable. The biggest economic news came from the June employment report, which was significantly weaker than expected. Despite mostly positive news for mortgage markets, however, rates ended the week slightly higher, mostly due to portfolio adjustments on the last day of the quarter.

The U.S. economy added just 57,000 jobs in June, well below the consensus forecast for a gain of 115,000 and the fewest since February. Revisions also reduced payroll estimates for the previous two months by a combined 74,000 jobs. Hiring was strongest in professional services, social assistance, and healthcare, while leisure and hospitality experienced notable job losses.

Wage growth remained moderate, with average hourly earnings increasing 0.3% for the month, in line with forecasts. On an annual basis, wages rose 3.5%, up from 3.4% the previous month (the slowest pace of growth since May 2021) and below the current inflation rate. The unemployment rate unexpectedly declined to 4.2% from 4.3%, but the improvement was not entirely encouraging. The drop was largely driven by people leaving the labor force rather than stronger hiring. This can be seen in the unexpected decline in the participation rate (the percentage of working-age people in the labor force) to just 61.5%, the lowest level since March 2021, suggesting softness in the labor market.

The latest JOLTS (job openings and labor turnover rates) report, covering the month of May, presented a more resilient picture for that period. At the end of May, there were 7.6 million job openings, well above the consensus forecast of 7.3 million and the most since May 2024. There were 1.04 openings for every unemployed person, up slightly from a year ago. More openings suggest that companies face greater pressure to raise wages to compete for available talent.

Another closely watched component of the report is the quits rate, which measures the percentage of people voluntarily leaving their jobs. In May, the quits rate was 1.9%, roughly the same as one year ago, but down from a peak around 3.0% in early 2022 during the post-pandemic labor market surge. Generally, workers are more likely to leave their jobs when they are confident in their ability to find a better opportunity. Overall, recent labor market data continues to suggest a slow pace of both hiring and firing.

Looking ahead, attention will remain fixed on the conflict in the Middle East and the proposed deal to ease tensions. Investors also will monitor comments from Fed officials about future monetary policy. The detailed minutes from the June 17 Fed meeting will come out on Wednesday. For economic data, the ISM national services sector index will be released on Monday and Existing Home Sales on Thursday.

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