ISM Manufacturing

• U.S. manufacturing expanded for a sixth straight month in June, with the ISM Manufacturing PMI registering 53.3, signaling continued growth despite coming in below expectations (53.9).
• Growth moderated during the month, as new orders, production, and price increases all slowed, while employment remained in contraction despite modest improvement.
• Manufacturers cited rising geopolitical pressures, with respondents noting the Iran conflict has increased raw material costs, particularly for oil-based inputs like adhesives.

ADP Employment

• Private employers added 98,000 jobs in June, below both May's 122,000 increase and economists' expectations of 110,000, signaling continued moderation in labor market growth.
• Job gains were led by education & health services, financial activities, and trade, transportation & utilities, while natural resources and mining lost jobs.
• ADP noted hiring is slowing due to both softer labor demand and labor supply constraints, reinforcing expectations for a cooling job market ahead of Thursday's official U.S. employment report.

Jobs Report

• June's jobs report came in below economists' expectations, signaling continued moderation in hiring despite ongoing labor market resilience.
• The labor market has improved meaningfully from late 2025, with the economy adding an average of 92,000 jobs per month over the past six months, compared with an average loss of 8,000 jobs per month in the previous six-month period.
• Despite softer monthly hiring, the broader trend suggests the U.S. labor market has stabilized, easing concerns that emerged during the second half of last year.

Jobless Claims

• Initial jobless claims, a measure of how many workers were laid off across the U.S., decreased to 215,000 in the week ended June 25, down 12,000 from the prior week.
• The four-week moving average was 222,000, down 1,500 from the prior week.
• Continuing claims — those filed by workers unemployed for longer than a week — increased at 1.814 million in the week ended June 18. This figure is reported with a one-week lag.

Fed's Balance Sheet

• The Federal Reserve's assets totaled $6.736 trillion in the week ended July 2, flat $0.0 billion from the prior week.
• Treasury holdings totaled $4.492 trillion, up $4.1 billion from the prior week.
• Holdings of mortgage-backed securities (MBS) were $1.95 trillion in the week, down $16.4 billion from the prior week.

Total Public Debt

• Total public debt outstanding was $39.39 trillion as of July 2, an increase of 8.8% from the previous year.

GDP

• The latest annualized U.S. GDP stands at $31.87 trillion as of March 31, 2026, an increase of 1.41% from the previous quarter, & an increase of 6.07% from the previous year.
• The total public debt-to-GDP ratio is at 122.59% as of March 31, an increase of 2.05% from the previous year.

Inflation Factors

CPI:

• The consumer-price index rose 4.2% in June year over year.
• On a monthly basis, the CPI decreased 0.0% in June on a seasonally adjusted basis, after increasing 0.5% in May.
• The index for all items less food and energy (core CPI) remained flat 0.0% in June, after rising 0.2% in May.
• Core CPI increased 2.9% for the 12 months ending June.

Food & Beverages:

• The food at home index increased 2.5% in June from the same month a year earlier, and staying flat 0.0% in June month over month.
• The food away from home index increased 3.1% in June from the same month a year earlier, and staying flat 0.0% in June month over month.

Commodities:

• The energy commodities index decreased 0.0% in June after increasing 6.7% in May.
• The energy commodities index rose 40.3% over the last 12 months.
• The energy services index fell 0.0% in June after increasing 0.7% in May.
• The energy services index rose 2.3% over the last 12 months.
• The gasoline index rose 40.3% over the last 12 months.
• The fuel oil index rose 57.4% over the last 12 months.
• The index for electricity rose 5.1% over the last 12 months.
• The index for natural gas rose 1.5% over the last 12 months.

Supply Chain:

• Drewry's composite World Container Index increased to $4,530.42 per 40ft container for the week of July 2.
• Drewry's composite World Container Index has increased by 51.9% over the last 12 months.

Housing Market:

• The shelter index decreased 0.0% in June after increasing 0.3% in May.
• The rent index decreased 0.0% in June after increasing 0.3% in May.
• The index for lodging away from home decreased 0.0% in June after increasing 2.6% in May.

Federal Funds Rate

• The effective Federal Funds Rate is at 3.63%, down (0.01%) year to date.

Money Market Funds

• ICI money market fund assets stood at $7.95 trillion as of July 1, 2026, up 0.6% from the previous week, & up 12.5% from the previous year.

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Middle East

• The U.S. and Saudi Arabia experienced their most significant diplomatic and military rift in years after Saudi Arabia initially denied U.S. access to its bases and airspace for a planned operation to secure the Strait of Hormuz, prompting Washington to threaten withholding missile defense support.
• The dispute has raised questions about the future of the U.S.-Saudi security partnership, with the U.S. now considering reducing its military presence in Saudi Arabia as Riyadh pursues a more independent, de-escalatory approach toward Iran.
• U.S.-Iran negotiations have stalled, with both sides delaying substantive nuclear talks and instead disputing ceasefire terms, raising the likelihood of prolonged negotiations rather than a near-term resolution.
• The current stalemate is said to benefit both sides in the short term: Iran receives sanctions relief and avoids major nuclear concessions, while the Trump administration avoids renewed military conflict as it continues pursuing a diplomatic agreement.

Europe

• Russia launched one of its largest aerial assaults of the war, firing 74 missiles and 496 drones at Ukraine overnight, with Kyiv suffering the heaviest damage. At least 17 people were killed and more than 80 injured.
• The attacks underscore the continuing stalemate in the conflict, as Russia intensifies long-range strikes while peace negotiations remain stalled and Moscow continues to reject a ceasefire without major Ukrainian concessions.
• Europe's heat wave is driving a surge in demand for Chinese-made air conditioners, with China's exports to France (+57%) and Spain (+41%) rising sharply in May as European households seek cooling solutions.
• The trend highlights the tension between trade policy and consumer demand, as the EU criticizes China's manufacturing overcapacity while relying on Chinese products to meet growing demand during extreme weather.

China

• China's manufacturing sector continued to expand in June, with the private PMI easing slightly to 51.7 as factory output slowed, though new orders remained strong and employment posted its strongest growth since August 2023.
• Manufacturers benefited from easing input costs, but weakening export demand and softer business sentiment continue to pose risks to China's manufacturing outlook.
• China and the EU agreed to hold regular ministerial-level trade talks as both sides seek to address trade imbalances, with the EU pushing to reduce its €360 billion ($410 billion) trade deficit with China.
• Trade tensions remain elevated despite renewed dialogue, with the EU implementing new measures targeting Chinese imports while China is urging Europe to ease restrictions on exports of advanced technology.

Venezuela

• Twin magnitude 7+ earthquakes struck Venezuela on June 25-26, killing 900+ and leaving 51,000 missing — citizens conducted their own rescue operations amid a slow government response, putting Rodríguez's leadership under its first major test and casting uncertainty over the Trump administration's partnership with her and the prospect of US investment reopening in the country

Colombia

• Far-right populist Abelardo de la Espriella — a criminal defense attorney who has represented paramilitary commanders and money launderers — captured 44% of the vote in Colombia's first-round presidential election, setting up a June 21 runoff against leftist Iván Cepeda that presents voters with the starkest ideological choice in the country's modern political history

India

• Google's $15 billion AI data center hub in water-stressed Visakhapatnam, India — backed by $2.3 billion in state subsidies and partnerships with Adani and Bharti Airtel — highlights the intensifying geopolitical race to anchor U.S. AI infrastructure in high-growth emerging markets, even as local displacement and resource competition spark growing backlash that could complicate future build-outs across the developing world

Africa

• The WHO declared a global health emergency over an Ebola outbreak in Congo and Uganda, with around 80 deaths and over 200 suspected cases recorded — including cases in both countries' capitals — involving the rare Bundibugyo strain for which no approved vaccine or treatment currently exists

Cuba

• CIA Director Ratcliffe made a rare visit to Havana to warn Cuban officials they have a limited window to engage with the Trump administration, as the island faces severe fuel shortages, widespread blackouts, and growing street protests

Australia

• Australia is permanently diversifying its oil imports beyond Middle East suppliers and accelerating its renewable energy transition, even as it secures emergency fuel reserves to buffer against the ongoing Strait of Hormuz disruption

Canada

• Canada approved Enbridge's ~$3 billion Westcoast pipeline expansion, adding 300 million cubic feet per day of capacity as part of PM Carney's push to reduce U.S. trade dependence and boost Asian energy exports

Italy

• Trump publicly broke with Italian PM Giorgia Meloni — once his closest European ally — after she refused to send forces to the Strait of Hormuz and called his attacks on Pope Leo "unacceptable," leaving her isolated on both sides of the Atlantic

Japan

• Japan will release an additional 20 days' worth of oil reserves in early May to stabilize energy prices, as the country relies on the Middle East for over 90% of its crude imports and the Strait of Hormuz remains largely blocked

New Zealand

• New Zealand plans to spend roughly $7 billion on its military, including enhanced strike capabilities and new helicopters, aiming to reverse military attrition by recruiting 2,500 personnel in the coming years

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Oil Prices

• WTI: $68.46 per barrel
• (4.81%) WoW; (8.62%) YTD; +4.60% YoY
• Brent: $71.57 per barrel
• (4.90%) WoW; (8.89%) YTD; +3.56% YoY

US Production

• U.S. oil production amounted to 13.8 million bpd for the week ended June 25, up 0.0 million bpd from the prior week.

Rig Count

• The total number of oil rigs amounted to 573, up 10 from last week.

Inventories

Crude Oil

• Total U.S. crude oil inventories now amount to 408.4 million barrels, down (2.5%) YoY.
• Refiners operated at a capacity utilization rate of 96.1% for the week, down from 96.7% in the prior week.
• U.S. crude oil imports now amount to 5.134 million barrels per day, down (19.5%) YoY.

Gasoline

• Retail average regular gasoline prices amounted to $3.84 per gallon in the week of July 2, up 21.4% YoY.
• Gasoline prices on the East Coast amounted to $3.86, up 22.8% YoY.
• Gasoline prices in the Midwest amounted to $3.71, up 18.5% YoY.
• Gasoline prices on the Gulf Coast amounted to $3.42, up 20.6% YoY.
• Gasoline prices in the Rocky Mountain region amounted to $3.85, up 16.6% YoY.
• Gasoline prices on the West Coast amounted to $5.05, up 19.1% YoY.
• Motor gasoline inventories were up by 2.1 million barrels from the prior week.
• Motor gasoline inventories amounted to 216.3 million barrels, down (6.8%) YoY.
• Production of motor gasoline averaged 9.97 million bpd, up 3.6% YoY.
• Demand for motor gasoline amounted to 9.131 million bpd, up 5.7% YoY.

Distillates

• Distillate inventories increased by 3.1 million in the week of July 2.
• Total distillate inventories amounted to 108.6 million barrels, up 4.8% YoY.
• Distillate production averaged 5.188 million bpd, up 3.1% YoY.
• Demand for distillates averaged 3.614 million bpd in the week, down (10.6%) YoY.

Natural Gas

• Natural gas inventories increased by 76 billion cubic feet last week.
• Total natural gas inventories now amount to 2,922 billion cubic feet, down (1.0%) YoY.

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High-yield:

High yield bond yields decreased 1bps to 7.18% and spreads tightened 5bps to 302bps. Leveraged loan yields increased 4bps to 8.94% and spreads remained same at 498bps. WTD high yield bond returns were positive 16bps. WTD leveraged loan returns were positive 19bps. 10yr treasury yields increased 11bps to 4.48%. High yield spreads tightened on strong inflows, resilient economic data, and improving geopolitical sentiment. June default activity picked up, led by Dish DBS's $9.75bn Chapter 11 filing, lifting the HY default rate to its highest level since Jan-24. Leveraged loan prices increased on active issuance, steady CLO inflows, and favorable macro data.

Week ended 07/03/2026

Yields & Spreads¹

Pricing & Returns¹

Fund Flows²

New Issue²

Distressed Level (trading in excess of 1,000 bps)²

Total HY Defaults

Leveraged loans:

Week ended 07/03/2026

Yields & Spreads¹

Pricing & Returns¹

Fund Flows²

New Issue²

Distressed Level (loan price below $80)¹

Total Leveraged Loan Defaults

Default activity:

• Most recent defaults include: Dish DBS ($9.8bn, 6/30/2026), QVC Group ($2.2bn, 4/16/2026), Cumulus Media ($641mn, 03/05/2026), Trinseo ($390mn, 02/17/2026), Beasley Broadcasting Group ($189mn, 02/01/2026), Nine Energy Service ($300mn, 02/01/2026), Multi-Color ($4.5bn, 01/29/2026), Pretium Packaging ($201mn, 01/28/2026), Saks Global Enterprises ($2.7bn, 12/30/2025), and United Site Services ($2.6bn, 11/30/2025).

CLOs:

Week ended 07/03/2026

New U.S. CLO Issuance²

New U.S. CLO YTD Issuance²

Note: High-yield and leveraged loan yields and spreads are swap-adjusted

¹ Source: Credit Suisse High Yield and Leveraged Loan Index

² Source: JP Morgan

Ratings activity:

S&P and Moody's High Yield Ratings

Source: Bloomberg

Appendix:

Diagram A: Leveraged Loan Trading Levels

Source: Credit Suisse Leveraged Loan Index

Diagram B: High Yield and Leveraged Loan LTM Price

Diagram C: Leveraged Loan and High Yield Returns

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Diagram J: New Issue - Leveraged Loan and High Yield

Diagram K: Leveraged Loan + HY Defaults by Sector – LTM

Source: JP Morgan Default Monitor

Diagram L: CLO Economics

Diagram M: Developed Country Govt. Bond Yields (%)

Diagram N: S&P 500 Historical Multiples

Source: S&P Capital IQ

Diagram O: U.S. Middle-Market M&A Valuations (EV/EBITDA)

Source: Pitchbook

Diagram P: U.S. Large Cap M&A Valuations (EV/EBITDA)

Source: Pitchbook

Diagram Q: Dry Powder for All Private Equity Buyouts ($B)

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Diagram R: Dry Powder for All US Debt ($B)

Diagram S: Structured Credit Spreads

Source: Bloomberg

Diagram T: Structured Credit Yield

Diagram U: SOFR Curve

Diagram V: CMBS Spreads

Source: Bloomberg

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