What Happened

  • ADP private payrolls beat expectations, keeping labor momentum intact.
  • Equities paused after recent gains while yields stayed elevated.
  • Oil softened on a reported inventory build.
  • Credit spreads were stable with no stress signals.

What It Means

  • Labor strength keeps the Fed cautious and limits aggressive cut pricing.
  • Higher yields are starting to test high-duration equity positions.
  • The risk tone remains constructive but less exuberant.

What I Think

  • I am keeping a defensive tilt into Friday’s payrolls.
  • If NFP confirms strength, expect a stronger dollar and rotation into value.
  • Energy is still the best hedge against growth surprises.

Market Terms

  • ADP payrolls - A private-sector employment estimate released ahead of NFP.
  • Duration risk - Sensitivity of asset prices to changes in yields.
  • Inventory build - Increase in stored supply that can pressure prices.