The Profit Margin: June 8, 2026
Statistic of the Week
Gold continues to play an increasingly important role in central bank reserves. Approximately 27% of global central bank reserves are now held in gold, up from a recent high of 20%. As a result, gold has surpassed U.S. Treasuries as the largest asset held on central bank balance sheets. U.S. Treasuries now account for roughly 22% of total central bank reserve holdings.
Global Perspective
Sixty trading partners of the United States are expected to face a new tariff regime. The White House announced tariffs ranging from 10% to 12.5% on imports from the United Kingdom, Canada, China, the European Union, Mexico, and Japan. According to the Office of the U.S. Trade Representative, the tariffs are intended to address concerns that these countries have not done enough to restrict imports produced with forced labor.
Market Moving Events
Tuesday: Trade Balance, Existing Home Sales, Wholesale Inventories
Wednesday: CPI, Federal Budget
Thursday: Jobless Claims, PPI
Friday: Consumer Sentiment
Commentary
After the selloff that followed the onset of the conflict with Iran, U.S. equity markets staged an impressive rally. Last week, however, that momentum stalled. All three major averages retreated after a stronger-than-expected employment report (chart below) raised concerns that the Federal Reserve may be less inclined to lower rates, and potentially more willing to tighten policy, in the second half of the year. The DJIA, after reaching a record high on Thursday, reversed course and finished the week down 0.32%.1 The S&P 500 posted its worst weekly performance since May, declining 2.59%.2 The Nasdaq experienced its largest point decline on record Friday and its steepest percentage drop in more than a year, falling 4.68% for the week.3 Fixed income markets were also volatile, with the 10-year Treasury yield finishing above the key 4.50% threshold at 4.52%.4
The employment report showed the unemployment rate holding steady at 4.3%.5 Beneath the headline figures, however, there were signs of labor market weakness. The average duration of unemployment increased from 24.4 weeks to 26 weeks, and more than one-quarter of unemployed workers have now been out of work for over a year.6 At the same time, job creation exceeded expectations, aided by approximately 70,000 hospitality jobs that analysts attribute in part to World Cup-related activity, along with continued strength in government hiring.7 Under normal circumstances, a stable unemployment rate and stronger-than-expected payroll growth would likely be viewed positively by investors. With the probability of a Fed rate hike now estimated at roughly 72%,8 expectations for policy easing continue to fade. This week’s CPI and PPI reports will play an important role in shaping market expectations for the Federal Reserve’s path forward.
Chart of the Week
The U.S. economy added 172,000 jobs in May, well above analyst expectations. Additionally, the payroll figures for March and April were revised higher by a combined 93,000 jobs.
Source Materials
Market Moving Events:
MarketWatch.com
Chart of the Week: Clearnomics,
Bureau of Labor Statistics
Statistic of the Week:
Barron’s
Global Perspective:
The Economist
Commentary:
1. Bloomberg, Investor’s Business Daily
2. Bloomberg, Barron’s
3. Bloomberg, MarketWatch.com
4. MarketWatch.com
5. Bureau of Labor Statistics
6. MarketWatch.com
7. Investor’s Business Daily
8. Barron’s