GOOD MORNING! The ceasefire that is seeing more fires than ceases lifted the price of oil again. The uncertainty regarding the Middle East war plus warnings that a longer duration may crate a global shortage and higher inflation weighed on stocks and bonds on Wednesday. Add new proposed tariffs to weigh on companies, consumers and the markets. Mixed service PMIs from the S&P Global Group (down slightly) and ISM (up modestly) with both indicating that labor market conditions remained weak. This was in contrast to the ADP Private Employment Change Report, which showed 100k-plus gain for the second consecutive month and the biggest gain in 14 months. The ADP report was also in contrast to the Beige Book which, in the summary, said employment showed little to no gain. The Beige Book also said slight to moderate growth in most Fed Districts while prices increased at moderate to strong pace across the US, with input costs continued to rise faster than selling prices, contributing to broader concerns about margin compression. On consumers, the Beige Book said higher-income households remained resilient, middle-income households were “squeezing the life out of every dollar before deciding to spend it”, and low-income consumers showed greater financial strain. Even so, the data and the Beige Book is not likely to move the Fed to change rates in 2 weeks and keep oil and bond markets resembling a whack-a-mole game.

     Another ceasefire has been brokered between Israel and Lebanon. This supposedly another obstacle (evidently one of many) between negotiations between the US and Iran. Despite that, the markets are showing a risk-off sentiment. This comes after disappointing earnings and guidance by a tech company and has the NASDAQ futures contracts leading the S&P contracts lower. The shift to safer assets are helping to lift the large cap stocks of the Dow and Treasury prices higher in early trading. Fed speakers before the self-imposed silent period next week before the FOMC meeting and economic data (and any breaking geo-political headlines) are on tap today. Already reported was the 97k layoff announcements during May as totaled in the Challenger Layoff Announcement Report. Still to come are weekly jobless claims and revised first quarter productivity and unit labor costs.