Global Macro Commentary: July 2: Soft Payrolls, USD/JPY Off Highs

Research evidence excerpt

Global Macro Commentary: July 2: Soft Payrolls, USD/JPY Off Highs

Update

July 2, 2026 08:55 PM GMT

Morgan Stanley & Co. LLCMGlobal Macro Commentary | North America Molly Nickolin

Strategist

July 2: Soft Payrolls, USD/JPY Molly.Nickolin@morganstanley.comLingdi Xu +1 212 761-3592

Economist

Lingdi.Xu@morganstanley.com +1 212 761-2957

Off Highs Sofia Palacios

Sofia.Palacios@morganstanley.com +1 212 761-0428

Soft US payrolls pushed Fed hike timing later; front-end rates

Morgan Stanley Asia Limited+

rallied while long-end yields edged higher; chip weakness Gek Teng Khoo

weighed on US equities; JPY gained on intervention risk; EMFX StrategistGek.Teng.Khoo@morganstanley.com +852 3963-0303

strengthened; DXY at 100.88 (-0.5%); US 10y at 4.48 (+0.4bp).

Morgan Stanley MUFG Securities Co., Ltd.+

Hiromu UezatoA softer US labor print reduced near-term hike pressure, driving a twist-

steepening in rates, broad USD weakness, and a defensive rotation beneath Hiromu.Uezato@morganstanleymufg.com +81 3 6836-8431

stable headline equities.

Morgan Stanley India Company Private Limited+

Nimish M Prabhune

Developed Markets

Nimish.Prabhune@morganstanley.com +91 22 6996-1862

• US rates twist-steepened after June payrolls rose 57k versus 113k

expected, with prior months revised down by 74k. The unemployment rate Morgan Stanley & Co. International plc+

Jasper Knyphausen

fell to 4.2%, but the decline was partly tied to weaker participation. Front- Strategist

end Treasuries rallied as markets pushed the next fully priced Fed hike from Jasper.Knyphausen@morganstanley.com +44 20 7425-2185

October to December. The move was concentrated in the policy-sensitive

sector, while the long end cheapened modestly into the early close (2y: -

3.7bp; 30y: +1.5bp). Breakevens were mixed to lower as stable oil helped