Bond investors face a key test of demand this week as the Treasury Department auctions $119 billion in debt, including 10-year notes and 30-year bonds. The sales come as markets weigh inflation and fiscal concerns against softer expectations for rate hikes following a weaker employment report. Investors are also awaiting Wednesday's release of the June FOMC minutes for further insight into the Fed's recent hawkish shift.

Weaker-than-expected June jobs data revived a rotation trade, with investors moving out of some AI-linked technology shares and into more defensive sectors such as health care and consumer staples. The US added 57,000 jobs in June, helping reduce expectations for a July Fed rate increase and supporting the view that policymakers may hold rates steady. The Dow Jones Industrial Average rose 1.1% to a record high, while the Nasdaq Composite fell 0.8%.

The US job market has shown surprising stability halfway through 2026, with an average of 92,000 jobs added monthly, a significant improvement from the previous year's average losses. The unemployment rate dropped to 4.2% in June, although this was partly due to a decline in labor force participation. Economists note that the workforce has been stagnating, likely due to retiring baby boomers and immigrants leaving the workforce.