What are the main events for today?

In the European session, the main highlight is the Swiss CPI report. The CPI Y/Y is expected at -0.1% vs -0.1% prior and the M/M figure is seen at 0.0% vs 0.1% prior. This would keep headline inflation in deflationary territory although the Core measure remains positive at 0.5% Y/Y. The market is pricing just a 25% probability of a 25 bps cut in September with a total of 13 bps of easing by year-end. Therefore, the SNB is not expected to go back to NIRP yet.

The central bank members did mention many times that negative rates remain an option but they always sounded reluctant to do so. Lower than expected inflation data could see the market pricing higher chances of negative rates though considering that the Swiss Franc remains incredibly strong.

In the American session, we have the main event of the day, that is the US NFP report. We will also get the US Jobless Claims and the US ISM Services PMI but the focus will be on the NFP unless Jobless Claims come out with a big surprise. The Non-Farm Payrolls are expected at 110K vs 139K prior and the Unemployment Rate to tick higher to 4.3% vs 4.2% prior. The Average Hourly Earnings Y/Y is expected at 3.9% vs 3.9% prior and the M/M figure at 0.3% vs 0.4% prior.

We will likely need notable deviations from the expected numbers to get a sustained reaction given that the markets will close earlier and we have a holiday tomorrow. At the moment, the market is pricing 67 bps of easing by year-end so a hot report should trigger a bigger reaction as the market goes back to price in around 50 bps of cuts. We will likely need a very soft report to force the Fed to consider a rate cut in July already and that would certainly move the markets a lot.

The US Initial Claims are expected at 240K vs 236K prior, while Continuing Claims are seen at 1956K vs 1974K prior. The labour market has been resilient and continues to show that there’s low risk of losing a job but it’s also harder to get one. This is also what the economists at the ADP reported yesterday. This is most likely due to policy uncertainty which should clear out in the next months as we get the “big, beautiful bill” and trade deals done.

The US ISM Services PMI is expected at 50.5 vs 49.9 prior. This is a volatile survey and the S&P Global one proved to be more reliable. The prices component should be the only thing to watch ahead of the US CPI next week.