US DATA: Response Rates For Establishment, Household Surveys Diverge

Private payrolls rose by 63k in February, per the ADP Employment Report. This was the strongest initial reading since July 2025 and a beat vs the 50k expected, but its impact was offset by some mitigating factors that pointed to relatively subdued labor market conditions.

• The first was the downward revision to January's 22k rise (to 11k), which meant that the 3-month moving average came in at 38k which was exactly as expected (incorporating January pre-revision and Feb consensus 50k). However this also meant that despite the strong February figure, the 3-month average was the lowest since July 2025.
• The second was a lackluster composition of gains: while a 19k increase in construction payrolls was a positive sign cyclically, there was a 5k drop in manufacturing and 30k in professional/business services. This left the notoriously acyclical education and health services sector driving the overall gain in payrolls, at 58k, the strongest since August 2024. Services jobs (ex-education/health) rose 5k which was better than the -39k prior but left the 6-month pace at just -22k.
• Finally, the wage dynamics were soft. ADP Chief Economist Nela Richardson points out in the press release that "with hiring concentrated in only a few sectors, our data shows no widespread pay benefit from changing jobs. In fact, the pay premium for switching employers hit a record low in February." Job-stayer pay rose 4.5% Y/Y, with the aforementioned job changes up 6.3%.
• In better news, small-firm (1-19 employees) saw a 58k rise in payrolls, the best since January 2024 in something of a bellwether category for underlying labor demand.
• Overall the headline figure was very close to the February BLS private payrolls expectation of 65k (which would be down from 172k in January) so shouldn't shift expectations very much. Indeed, the gap in January between BLS and ADP was very wide so it's likely ADP would have been faded this month either way.

+20,000 SFRJ6 97.62/98.37 call strip, .75 ref 96.455 (position add w/ acct long appr 40k coming into session)

Chairman of the Joint Chiefs of Staff General Dan Caine and US Defense Secretary Pete Hegseth are speaking at a press conference at the Pentagon. LIVESTREAM Comments are consistent with what appears to be a considered public pivot from the Trump administration to narrow the scope of the campaign to focus entirely on military goals, rather than regime change or other potential political outcomes.

• Hegseth says, “America is winning.” He says the US has “only just begun” its campaign against Iranian military targets. He says the Iranian air force “is no more” and their navy “rests at the bottom of the Gulf.”
• He says the US and Israel will soon have “total control” over Iranian airspace. With this achieved, Hegseth says the US will employ heavy bombing raids. He adds that the US can sustain this period of the campaign for “as long as needed.”
• Hegseth stresses that the operation has not included the “nation-building” of the 2003 Iraq War. Hegseth later adds that the “only limits” are President Donald Trump's “desire to achieve specific effects.”
• Caine says the operation was launched with “clear military objectives” to prevent Iran from projecting power beyond its border via its ballistic missile programme and with an aim of degrading its military to such an extent that it cannot be reconstituted in the future.
• Caine says Iranian ballistic missile firings are down 86% from the first day, and attack drone shots are down 73%. He says that the US will strike “deeper into Iranian territory” as it gains more air superiority.
• Caine echoes Trump's Oval Office comments yesterday in saying that the US has sufficient munitions to continue operations but declines to provide details. He says over the next 24-48 hours, the US will continue to strike infrastructure and Iranian naval capabilities.