Top Bloomberg Reporter: Wall Street’s Biggest Winning Trade Is “Starting to Fade” After Jobs Report Shock

The momentum commercialized that powered the US banal marketplace done the archetypal fractional of 2026 is showing cracks, and Bloomberg US Equities Reporter Natalia Kniazhevich says the unwind is already underway.

On the July 3 Bloomberg Daybreak segment, Kniazhevich explained that "Momentum is the best-performing factor. It is up by 28% year to date. We spot this momentum origin starting to slice now." Her framing comes conscionable aft the Bureau of Labor Statistics delivered a softer-than-expected June payrolls report, forcing a accelerated repricing of the Fed outlook.

A Weak Jobs Report Just Changed The Fed Narrative

June nonfarm payrolls came successful at 57,000, well beneath estimates successful the 100,000 to 110,000 range, though the unemployment complaint ticked down to 4.2%, cushioning the blow. The BLS bid shows full nonfarm employment astatine 158,984 thousand successful June 2026, up from 158,927 1000 successful May. Average hourly net continued to firm, printing astatine $37.64 successful June, up from $36.36 a twelvemonth earlier.

Traders responded by pushing July rate-hike likelihood to efficaciously zero and pricing lone astir 30 ground points of Fed moves by year-end. Bloomberg Executive Editor for Asian Markets Paul Dobson summarized the shift: "It takes the unit disconnected the Federal Reserve to rise involvement rates immoderate clip fast. The marketplace is not truly expecting that to beryllium a necessity anymore." Marianne Zangerl, Aberdeen's Global Head of Multi-Asset and Alternative Investment Solutions, went further, reaffirming that nary hikes are coming done 2026: "Nothing successful this study changes that view. We won't spot thing hap this year."

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The Fed funds people precocious bound sits astatine 3.75%, unchanged since the December 10, 2025 cut. The 10-year Treasury output closed astatine 4.48% connected July 1, and the 2s-10s dispersed has compressed from 0.74% successful aboriginal February to 0.35% currently, grounds that the curve is repricing maturation hazard alternatively than caller inflation.

Momentum's Record Run Is Starting To Fade

Kniazhevich flagged the seasonal setup down the rotation: "People are taking profits up of July, August abrogation time. Hedge funds person posted truly beardown performance," adding that per Goldman Sachs it was 1 of the champion quarters successful history.