Bloomberg Daybreak Weekend: Jobs Report, France's Economy, China-Iran Relations

Economic Outlook: US Jobs and Consumer Spending

• 📉 Personal spending declined by 0.1% in May, with a notable pullback in discretionary categories like travel and food services due to higher prices and reduced income.
• ⚠️ Tariff pass-through, particularly into non-durable goods from China, is contributing to higher consumer prices and a retrenchment in spending.
• 🚗 Spending on autos declined sharply in May, partly due to a pull-forward earlier in the year in anticipation of tariffs and policy uncertainty.
• 📊 The upcoming June jobs report is expected to show 120,000 jobs added, but risks are skewed to the downside, potentially falling below 100,000 for the first time since early 2021.
• 📈 The unemployment rate is projected to rise to 4.3%, moving closer to the FOMC's year-end expectation of 4.5%.

Global Oil Markets and Geopolitics

• 🛢️ Crude oil prices are currently stable between $65-$70 per barrel, with the market discounting Middle East turmoil and expecting OPEC production increases.
• 🌊 The Strait of Hormuz, a critical chokepoint for 20% of global oil, is expected to remain open, and the market anticipates a potential oil glut by late summer.
• 🇺🇸 Despite US sanctions, Iranian oil production is reportedly at its highest in seven years, with China being its main customer.
• 🤝 China appears to be either bypassing or being allowed to ignore US sanctions on Iranian oil, possibly as a strategy to defy the US sanctions regime and challenge the US world order.
• 🏭 US domestic oil production is at an all-time high, driven by the shale revolution, contributing to the global oil supply.

France's Political and Economic Landscape

• 🇫🇷 France is navigating a year of political and economic turmoil following snap parliamentary elections, with a fragile minority government led by Prime Minister Gabriel Attal.
• 🏛️ President Macron has not ruled out dissolving parliament again, though it seems unlikely in the short term due to current polling.
• 📈 The French economy is experiencing sluggish growth momentum (0.5% GDP in 2025), with weak investment, limited consumption gains, and a negative contribution from net trade.
• ⚠️ Key challenges include high political uncertainty, trade uncertainty, and fiscal constraints, particularly in meeting increased defense spending commitments.
• 💰 The government faces tough negotiations to pass a new budget, aiming for significant savings that could lead to major political battles.

China-Iran Relations and Global Trade

• 🌏 China has been a critical partner for Iran, particularly in purchasing sanctioned oil, which represents about 10% of China's oil supplies.
• 🧱 China has welcomed Iran into groups like BRICS and the Shanghai Cooperation Organization, positioning them as partners to challenge the US world order.
• 🚢 The Strait of Hormuz is crucial for China, with 45% of its oil shipments passing through it, making it dependent on the waterway's stability.
• 🌐 Global trade has shown resilience despite US tariffs, with China's export growth at 7% in the first five months.
• 🌍 Companies are diversifying sourcing and manufacturing networks, with shifts towards Southeast Asia, the Middle East, Africa, and Latin America to mitigate tariff impacts.