EM CEEMEA CREDIT: POLAND: CB headlines

• The much weaker-than-expected ADP employment data has dented greenback sentiment Wednesday, most notable in the 70 pip move lower for USDJPY, which is extending session lows at typing to 143.55.
• Price action this morning fell just shy of last Friday’s highs of 144.44, and importantly, a bear cycle in USDJPY remains in play and sights remain on the next important support at 142.12, the May 27 low. As noted, clearance of this level would confirm a resumption of the bear leg and open 139.89, the Apr 22 low.
• Bank of Japan officials will closely watch the upcoming June Tankan survey, due July 1, for signs of resilience in non-manufacturers' sentiment and upward revisions to major firms’ capital investment plans, which would support its baseline view for a gradual rate-hike path, MNI understands.

The ADP employment and pay insights report for May showed a further significant miss, with the slowest monthly pace of hiring since March 2023. Weakness was widespread and whilst familiar NFP correlation concerns remain, the ADP data points to a clearly softening trend. That said, job changer pay growth saw a second month at 7.0% Y/Y for its strongest since Aug 2024, something we wouldn’t expect to see amidst a sharper cooling in the labor market. 

• ADP employment increased just 37k (sa, cons 114k) in May after a marginally downward revised 60k (initial 62k) in April.
• Consensus currently stands at 120k for Friday's private payrolls release. ADP has undershot private payrolls in each of the prior three months, by a large 107k in Apr, 23k in Mar and 23k in Feb (all according to latest vintages). That said, despite the weak correlation with payrolls, ADP data has appeared to recently have a smoother trend and it's pointing in a quickly moderating direction.
• Looking by industry size, there was weakness everywhere except for mid-sized firms with 50-249 employees. Within that, we don’t put much weight on the smallest 1-19 employee cohort seeing a -6k decline as it follows April’s +25k being the strongest of all firm size brackets.
• Goods employment fell 2k in May after 28k in April for the first decline since mid-2023. It averaged 19k in Q1 and 23k in 2024.
• Services employment meanwhile increased 36k for a similar pace to the 33k in April. It’s a notable markdown from the 119k averaged in Q1 and 122k in 2024.
• Within services, we note weakness in “trade, transportation & utilities” with -4k after 27k in April. This sector had been the second fastest growing area in April’s payrolls report behind healthcare, likely reflecting the sharp increase in inventories with tariff front-running.
• Rounding out the release, there was little new in the pay insights report. Job stayers Y/Y pay growth was unchanged at 4.5% whilst job-changers pay rose 7% for an unchanged pace from April’s revised figure. This leaves two months with job-changer pay growth at the highest since Aug 2024. 

EUREX ROLL PACE: Approximates:

• Buxl: 75%.
• Bund: 77%.
• Bobl: 75%.
• Schatz: 81%.
• BTP: 80%.
• BTS: 88%.
• OAT: 74%.