US: MNI POLITICAL RISK - Second Federal Court Weighs In On Trump Tariffs

• ADP employment was softer than expected in April at 62k (sa, cons 115k) after a downward revised 147k (initial 155k) in March.
• It’s the fourth weakest seasonally adjusted monthly increase since Jul 2020 and sees a continuation of a trend softening seen since late 2024 - see chart.
• Consensus currently stands at 122k for private payrolls in the April report released Friday. In the previous three months, ADP undershot private payrolls by 62k in Mar and 32k in Feb but overshot by 107k in Jan (prior to two-month revisions in Friday’s release).
• From the ADP press release: "Education and health services, information, and professional and business services lost jobs, while hiring in other sectors was moderate."
• "Unease is the word of the day. Employers are trying to reconcile policy and consumer uncertainty with a run of mostly positive economic data. It can be difficult to make hiring decisions in such an environment.”
• Interestingly, there don’t look to be clear cut signs of a tariff-related slowdown. Smallest businesses of 1-19 employees still saw a 20k increase in headcount (with the theory that smallest companies will be most vulnerable to the need for cash to meet sudden cost increases) although those with 20-49 employees did see a second monthly decline with -9k.
• Further, trade, transport & utilities saw the second strongest sector for hiring (+21k).
• Pay details were mixed. Job stayers saw 4.5% Y/Y median pay growth after 4.6% in March but job changer pay growth accelerated two tenths to 6.9% Y/Y for the highest since Dec.

• Treasury futures gain, extend top end of range after much lower than expected April ADP jobs data and down-revision to prior
• Jun'25 10Y currently +7.5 at 112-12.5 high (10Y yld slips to 4.1351% low), just round major resistance at 112-12 (61.8% retracement of the Apr 7 - 11 bear leg), next level at 113-04 (76.4% retracement of the Apr 7 - 11 bear leg).
• Cross asset: BBG US$ index dips to 1221.80 (-0.39); stocks retreat: S&P eminis -31 at 5552.75.

The initial downtick in Bunds, driven by the 0.1ppt upside “surprise” in the German CPI data, quickly fades, with the national readings in line with indications provided by the regional releases seen earlier in the day.

• Contract back to pre-release levels of ~131.65 after basing at 131.58, yields 2-3bp lower on the day, light flattening bias on the curve.