The Bank of Japan signaled that it may resume raising rates after a pause caused by uncertainty around US duties. In the U.S., the market awaits the June jobs report, which could reinforce expectations of a Fed rate cut, especially amid an already noticeable slowdown in private sector hiring. In the stock market, Datadog shares soared after the announcement of its inclusion in the S&P 500 index. On these and other topics - in our review of key events for the morning of July 3.

Demand for Japan's 30-year bonds hit the highest since February 

Investors bought up Japan's 30-year government bonds at an auction on Thursday, signaling some success by authorities in reducing volatility in the debt market, reports Bloomberg. The bid-to-cover ratio stood at 3.58, the highest level since February. By comparison, it was 2.92 in June and the average over the past 12 months was 3.33. The so-called tail (the difference between the average and the minimum accepted price) amounted to 0.31 versus 0.49 at the previous offering.

In June, Japan's Ministry of Finance announced plans to reduce the placement of bonds with maturities of 20, 30 and 40 years in the amount of 3.2 trillion yen ($22 billion) by the end of March 2026. At the same time, the Bank of Japan said it would slow down the reduction of the government bond purchase program.

However, global trends and this month's upcoming elections in Japan are likely to keep investors wary of the government's ability to cover huge budget deficits. Yields on Japan's 30-year securities are becoming increasingly difficult to contain as large local buyers, such as insurance companies, have begun to shy away from such long-term securities.

Bank of Japan board member urged to resume rate hikes

The Bank of Japan should resume raising interest rates after a temporary pause taken to assess the impact of U.S. duties, said board member Hajime Takata, expressing confidence that the country is close to achieving the central bank's sustainable inflation target. His words were reported by Reuters.

"My position is that the Bank of Japan has now only temporarily paused the rate hike cycle and should continue to transition away from ultra-soft policy after a certain observation period," Takata said.

"Given the high uncertainty over various U.S. measures, the BOJ should pursue a more accommodative monetary policy, avoiding excessive pessimism," he added.

The remarks, coming from Takata, who is considered by markets to be a neutral-moderate hawk on monetary policy, underscore the BOJ's intentions to return to raising rates once it becomes clearer whether the market can absorb the blow from U.S. duties, the agency said.

Takata also said Japan is close to achieving its 2% inflation target, helped by strong corporate profits, labor shortages and rising wages.

Weak U.S. jobs report may boost expectations for Fed rate cut but hurt stock market

The U.S. jobs report for June, to be released on Thursday, is likely to show a slowdown in hiring and a rise in the unemployment rate, writes Yahoo Finance. The data comes amid intense investor scrutiny over the state of the U.S. labor market and expectations over the Fed's next move to cut interest rates.

The U.S. Labor Department will release the report at 8:30 a.m. ET on Thursday. According to a consensus forecast by Bloomberg, the U.S. economy added 110,000 nonfarm jobs in June and the unemployment rate rose to 4.3%. By comparison, the economy added 139,000 jobs in May and the unemployment rate remained at 4.2%.

Wall Street's expectations for key indicators (according to Bloomberg):

Nonfarm employment growth: +110,000 (May was +139,000)

- Unemployment rate: 4.3% (4.2% in May)

- Average hourly wages, m/m: +0.3% (+0.4% in May)

- Average hourly wage, YoY: +3.8% (May - 3.9%)

- Average number of hours per week: 34.3 (no change)

"We believe labor demand is declining, but so far the decline has been moderate," wrote Morgan Stanley's chief U.S. economist Michael Gaypen.

"If the new jobs number falls below 100,000 or the unemployment rate rounds to 4.4%, it could crash the stock market by at least 1%," Stuart Kaiser, head of equity trading at Citi, wrote.

Datadog will enter the S&P 500

Datadog shares rose 10 percent in extended trading Wednesday after S&P Global announced that the monitoring software provider will replace Juniper Networks in the S&P 500 stock index, reports CNBC. S&P Global will make the change before the start of trading on July 9, it said in a statement.

Company stocks tend to rise after inclusion in a major index, as fund managers will be forced to rebalance portfolios to reflect these changes.

New York-based Datadog has an IPO in 2019. It earned $24.6 million in net income on revenue of $761.6 million in the first quarter of 2025. Its competitors include Cisco, Elastic, and cloud giants Amazon and Microsoft. Despite the positive news, Datadog shares have lagged the rest of the technology sector since the start of the year, down 5.5% by Wednesday's close, while the Nasdaq added 5.6%. Nevertheless, Datadog's market capitalization of $46.6 billion is significantly above the index median.

What's in the markets

Vietnam's stock market hit its highest in more than three years amid expectations of details of the U.S.-Vietnam trade agreement that President Donald Trump announced on Wednesday, writes CNBC.

The US is imposing a 20 percent duty on imports of goods from this Southeast Asian country, while Vietnam will impose a "zero tariff" on US goods, according to Trump. The announcement came amid the approaching deadline for the end of a 90-day extension of U.S. duties.

- The Vietnam Index rose 0.3 percent, reaching its highest level since April 2022.

- Japan's Nikkei 225 index was down 0.15%, while the Topix lost 0.2%. 

- In South Korea, the Kospi index added 0.8% and the Kosdaq small-cap index rose 0.5%.

- In Australia, the S&P/ASX 200 index added 0.1 percent.

- Hong Kong's Hang Seng Index was down 0.6 percent, while China's mainland CSI 300 added 0.1 percent.

- Futures on US stock indices are almost unchanged as investors await the key labor market report for June. During the previous session, the main US indices traded in a mixed direction: The S&P 500 reached a new intraday record and closed at an all-time high, the Nasdaq Composite rose 0.9% to a record high of 20,393.13, and the Dow Jones fell 0.02% to 44,484.42.

This article was AI-translated and verified by a human editor

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