Seven fundamentals for the week: Investors eye buildup to Nonfarm Payrolls, trade talks

Fasten your seatbelts – it is getting busy, and not only on the economic calendar. Nonfarm Payrolls (NFP) are brought forward to Thursday and compete with lawmakers in Washington and trade deals.

1) Will the trade deadline be pushed back?

The US-UK trade deal comes into effect this week – but it is the only one Washington signed. When US President Donald Trump announced a three-month delay on "reciprocal tariffs," the White House aimed for 90 trade deals in 90 days. That will not happen by July 9, but investors have two reasons to be cheerful.

First, the deadline is not holy. White House Press Secretary Karoline Leavitt hinted at such delays, and others echoed these.

Second, Trump may prefer speed over substance, perhaps striking broad principles of deals and leaving the details for later. As long as higher duties do not come into effect, the investors would be content with 10% duties.

Perhaps the next country to reach an accord with America is Canada. America's northern neighbor dropped its digital services tax – focused on American tech firms – in a bid to reignite trade talks. Things could be tougher with the EU and Japan, where negotiations appear to be stuck. With China, there is a tense truce.

The risk to closing deals is Trump's threat to slap sector-specific tariffs, such as on pharmaceuticals. Why make concessions if your counterpart leaves the option to slap fresh levies?

Optimism supports Stocks and the US Dollar (USD), while pessimism about deals helps Gold.

2) Big Beautiful Bill nears the finish line

Will Republicans manage to pass the president's budget? Trump dubs the wide-ranging legislation "Big Beautiful Bill," and it includes more military spending, minor cuts to social programs, and extension of tax cuts. That means an increase of $3.3 trillion in the US deficit, according to the Congressional Budget Office.

Investors cheer such fiscal stimulus, and especially lower taxes – but increased US borrowing could trigger jitters in bond markets. Will investors continue easily scooping up so much US debt? Some expect a reckoning.

The Senate is currently debating its version of the bill, and it seems likely the GOP will manage to muster a majority. It can afford to lose three backers. It will then return to the House of Representatives. Trump is strong-arming lawmakers to bring the bill to his desk by Friday, the 4th of July.

Delays would not be devastating, but any struggles to pass it could cause some unease in Stocks – providing excuses for some profit-taking.

3) Central-banker bonanza may trigger interesting headlines

Tuesday, 13:30 GMT. Federal Reserve Chair Jerome Powell, European Central Bank President Christine Lagarde, Bank of Japan Governor Kazuo Ueda, and Bank of England Governor Andrew Bailey will share the stage in Sintra, Portugal.

Will Powell open the door to cutting rates later this month? That is one critical question for markets. It could be driven by tariffs or by Artificial Intelligence, which erodes job growth in tech companies.

In the Eurozone, is the ECB done slashing borrowing costs in this cycle? It is unclear if the central bank intends to pause or not.

For Japan, the stronger Japanese Yen (JPY) means less pressure on Tokyo to intervene, but the fate of the next rate hike seems murky. Ueda could provide some clarity on that.

In the UK, Bailey tends to be pessimistic, and he will likely signal that the BoE's "Super Thursday" in early August will result in lowering borrowing costs.

4) ISM Manufacturing PMI provides the first NFP hint

Tuesday, 14:00 GMT. The ISM Purchasing Managers' Index (PMI) for the manufacturing sector has pointed to a slight contraction in recent months. Will it top 50 and indicate expansion? Probably not this time, according to economists.

So far, Trump's intentions to revive America's industrial sector have not lifted spirits in the manufacturing sector. The 48.5 print seen in May was the lowest since November 2024, and it is expected to rise slightly in June.

The Employment component serves as the first hint toward the jobs report on Thursday, and the Prices Paid figure represents inflation expectations, which are high.

The headline will likely make the biggest splash. It is worth mentioning that the JOLTs Jobs Openings report is due at the same time, but it is for May, lagging behind other indicators.

5) Will ADP's data disappoint for a third time in a row?

Wednesday, 12:15 GMT. Automatic Data Processing (ADP) is America's largest payroll provider, handling one of six payslips. While its private-sector jobs report is not always well-correlated with the official jobs report, this early publication shapes expectations.

In the past two months, ADP's figures were weak – only 60K jobs gained in April and 37K in May. Expectations stand at 85K for June.

Another sub-100K reading would raise questions: is the ADP report totally out of sync with the economy? Or are there worrying undercurrents that may result in a horrible NFP down the line?

6) Nonfarm Payrolls set to show another month of satisfactory job growth

Thursday, 12:30 GMT. The first Friday of the month is the Fourth of July, America's Independence Day, causing the NFP report to be brought forward.

For June, economists expect another month of gains of just over 100K, below the 139K reported for May. However, they project an increase in the unemployment rate to 4.3% from 4.2%, which would keep the Fed alert to any worrying snowballing in joblessness, either due to tariffs, AI, or anything else.

A sub-100K read would boost Gold while weighing on Stocks and the US Dollar. A figure above 150K would boost Equities and the Greenback while weighing on the precious metal.

I will be watching the participation rate in the workforce and the employment-to-population ratio, which have both declined recently. If the jobless rate remains low but the workforce is smaller due to less participation, it does not bode well for the economy. A strong labor market attracts workers in.

7) ISM Services PMI may reverberate for longer

Thursday, 14:00 GMT. This broad snapshot for America's largest sector has the final word on a shorter trading week in the US. It may shake markets if the NFP is inconclusive, despite being released after the official employment report.

The ISM Services PMI slipped just below the 50-point threshold in May, coming out at 49.9. A slight improvement is on the cards in June. A bounce above 51.6, which was the score in April, would cheer markets, while a second sub-50 reading would be worrying.

The Employment component will likely be ignored 90 minutes after the NFP is out, but the headline may reverberate for longer.

Final thoughts

While the war seems to be in the rearview mirror, trade talks and the bill are set to keep traders busy, on top of a busy and dense economic calendar in the US.