FED: Kashkari's Dissent Suggests Increased Caution After Oil Price Rebound

MNI's compilation of primary dealers' expectations for Thursday's June Employment Situation report shows a median of 110k overall nonfarm payroll gains (172k prior), with a range of between 25k (Citi) and 150k (SocGen). Current Bloomberg median consensus matches that (110k).

• Private sector payrolls are seen slowing to 98k (range of 30k to 145k) from 120k previously, with flat public sector payrolls vs the 52k prior. (Bloomberg median: 105k).
• There's a slight downside lean to expectations for the unemployment rate which is seen rounding to 4.3% for the 4th consecutive month, with a few analysts seeing a round 4.2% rate (none see an increase).
• Likewise, while average hourly earnings are expected to come in at 0.3% rounded by the median analyst, same as May, several see a reversion to the 0.2% seen in the preceding 2 months. 

EGBs and Gilts traded within the prior session's ranges Monday, with curves resolving slightly flatter.

• A weekend of back-and-forth developments on the US-Iran front culminated in a renewed halt of strike action, allowing energy prices and European yields to remain contained a Monday got underway.
• An early rise in yields came as energy prices ticked up from lows; ahead of likely next UK PM Burnham's speech (ultimately he said little new); and with Spanish inflation readings firmer than expected.
• BOE's Pill maintained that he thought rates may not have been sufficiently restrictive before the Iran war.
• In data, Eurozone economic sentiment was a little better than expected, while selling price expectations cooled for a second month in June.
• The German curve bear flattened, with the UK's twist flattening as Gilts outperformed Bunds. Periphery/semi-core EGB spreads traded mixed but little changed overall.
• Tuesday's docket is highlighted by French, German, and Italian flash June inflation (MNI's Eurozone inflation preview is here) as well as UK GDP data. Among multiple central bank speakers this week at the ECB's Sintra event, we get BOE's Breeden on Tuesday (Bailey speaks later this week) as well as several ECB Governing Council members.

Closing Yields / 10-Yr EGB Spreads To Germany

• Germany: The 2-Yr yield is up 2.3bps at 2.54%, 5-Yr is up 1.3bps at 2.599%, 10-Yr is up 0.6bps at 2.857%, and 30-Yr is up 0.4bps at 3.412%.
• UK: The 2-Yr yield is up 0.1bps at 4.126%, 5-Yr is down 1.3bps at 4.267%, 10-Yr is down 1.5bps at 4.716%, and 30-Yr is down 2.3bps at 5.425%.
• Italian BTP spread down 1bps at 72.5bps / French OAT up 0.4bps at 78.6bps  
   

• RES 4: 0.8747 76.4% retracement of the Feb 27 - Mar 16 bear leg
• RES 3: 0.8742 High Mar 31 and Apr 1 and a bull trigger
• RES 2: 0.8731 High May 18 
• RES 1: 0.8652/94 50-day EMA / High Jun 22
• PRICE: 0.8622 @ 16:35 BST Jun 29
• SUP 1: 0.8610/03 Low Mar 16 and the bear trigger / Low Jun 24
• SUP 2: 0.8597 Low Aug 14 ‘25
• SUP 3: 0.8577 Low Jul 2 ‘25
• SUP 4: 0.8544 50.0% retrace of the Dec 19 ‘24 - Nov 14 ‘25 bull leg   

A bearish threat in EURGBP remains present and this is highlighted by moving average studies that are in a bear-mode position. The cross continues to trade closer to its recent lows and sights are on the key support and bear trigger at 0.8610 (pierced), the Mar 16 low. A clear break of this level would highlight an important medium-term bearish development. Key short-term resistance is 0.8694, the Jun 22 high.