In 30 seconds: AI is now the leading cited reason for US job cut announcements in 2026, with tech sector layoffs surging and Broadcom posting its worst-ever earnings reaction day despite strong results, even as the tech sector's S&P 500 weighting hits a record 39.7%. Analysts debate how Europe and others should respond to China's surging trade surplus and undervalued currency, with Brad Setser arguing for coordinated tariffs on batteries and critical minerals, CNY appreciation pressure, and intervention to support the Korean won, while China simultaneously cuts fuel prices and restricts New Zealand lawmakers over Taiwan. Q1 2026 nonfarm business productivity was revised down to just +0.3% annualized, jobless claims rose above estimates, and NFIB hiring plans fell to their lowest since May 2020, painting a cautious picture of the US labor market despite recent productivity optimism. The Iran-US conflict has effectively closed the Strait of Hormuz to oil tankers, threatening global oil supply chains, driving up energy prices, and rippling into fertilizer and food commodity markets, even as analysts debate whether $150 per barrel oil predictions are exaggerated.
May Challenger Gray job cut announcements up 3.4% year-over-year. That year over year figure is a notable reversal from the prior month's 20.9% decline, suggesting the labor market's brief reprieve was exactly that. The technology sector accounted for 40% of job cuts in May — and simultaneously hit a record 39.7% weighting in the S&P 500. Tech's weighting in the S&P 500 hit 39.7% on Tuesday, a record that puts it just 5 percentage points below the March 2000 peak. The S&P 500 itself closed at 7,584.31, up 0.41% on the day. Then there is Broadcom ($AVGO), which reported its sixth consecutive triple play and was rewarded with its worst earnings reaction day ever, a 15% decline. The prior record was an 11% drop in December. Both of its biggest post-earnings selloffs have arrived in the last three quarters. Broadcom $AVGO earnings reaction day decline: 15%. Tech sector weighting in the S&P 500: 39.7%.
The basic arithmetic of China's trade position is not subtle. China's export growth has wildly exceeded global trade growth, while its import growth has lagged its own growth and global trade growth. The rest of the world is absorbing the consequences. Germany's trade balance (goods and services) is down 7 percentage points to around 2.5 percentage points. Korea's rates aren't that low — higher than Japan — and there isn't a fundamental case for the won's record weakness. The disconnect is that portfolio balancing is leading to foreign sales of Korean stocks as they soar, while momentum seems to lead foreign investors to pile into US tech stocks. Intervention is warranted to support the won and break market psychology; the changes in the NPS hedging policy in February were expected to help put a floor under the won but did not. China is cutting domestic retail gasoline and diesel prices from June 5, while guiding the CNY nominal exchange rate higher through stronger fixes. China's auto imports' share of its market is down 5 percentage points to 2%.
The revised Q1 2026 productivity report landed with a thud. Nonfarm business sector labor productivity growth was marked down to just 0.3% annualized, a 0.5pt revision lower than the preliminary estimate. The arithmetic is straightforward: output grew 1.0% while hours worked rose 0.7%, leaving almost nothing for productivity itself. Compensation climbed 2.1% against that backdrop, pushing unit labor costs up 1.8%. When workers cost more and produce roughly the same amount, someone is absorbing the difference. The question is whether this is a blip or a trend break. Over the last five quarters, productivity has grown at a 2.1% annual rate. Meanwhile, estimated total factor productivity has been less convinced, with the likelihood of being in a high-productivity regime falling even as labor productivity alone looked strong enough to be consistent with one. On the jobs side, initial claims rose to 225,000 for the week ending 2026-05-30, up 13,000 from the prior week's 212,000 and above the 215,000 estimate. Continuing claims came in at 1.777 million, just under the 1.780 million forecast. The state-level detail showed claims in California climbing 3,900, with Tennessee and Minnesota each up 1,700, while Texas fell 2,200. The NFIB hiring signal is harder to dismiss — a seasonally adjusted net 9% of owners plan to create new jobs in the next three months, down 4 points from April and the lowest level since May 2020. Plans to hire have now slipped below their historical average. US nonfarm business sector labor productivity growth: 0.3%.
Since the start of the conflict, only 29 oil tankers have navigated out of the strait, while 80 remain trapped inside the Gulf. The bottleneck, in other words, has a long tail. A prospective deal, meanwhile, doesn't address a key issue: Iran's nuclear program. Predictions that the depletion of petroleum stocks around the world could push oil prices to US$150 per barrel before the end of June if shipping does not resume through the Strait of Hormuz are exaggerated. But the counterfactual is doing a lot of work here. China's demand slump is, perversely, the thing keeping the global economy from a much worse outcome. The ripple effects have already hit fertilizer markets and then partially receded. US urea (Gulf of Mexico, New Orleans benchmark) spiked to ~$710 per metric ton in mid-April before falling ~33%, back to pre-war levels of ~$470.
oil tankers navigated out of Strait of Hormuz: 29. oil tankers trapped in Persian Gulf: 80.
Here is what it costs to borrow money right now.
30-year fixed mortgage: 6.48%, down 5 bp on the week
15-year fixed mortgage: 5.79%, down 1.36% on the week
Auto loan rate (60-month): 7.52%, up 4.16% on the quarter
Credit card rate: 21.00%, up 0.14% on the quarter
Prime rate: 6.75%, flat on the day