1. A hot jobs report flipped the Fed script from cuts to a hike.
May nonfarm payrolls landed at 172,000 on Friday, beating forecasts and setting off the sharpest one-day bond selloff since April's tariff shock. The 2-year Treasury yield jumped 13 basis points to 4.17% and the 10-year rose 8 basis points to 4.55%. Markets now fully price a Fed rate hike by December, with roughly 60% odds of a move as soon as October. Fed Chair Kevin Warsh is staring down an internal committee fight over whether inflation near 4.3% justifies tightening even as parts of the economy crack. Citigroup is the lone major still calling for three cuts, starting in September.
Why you care: Rate expectations drive deal flow, full stop. A market bracing for hikes instead of cuts means higher discount rates, fatter LBO financing costs, and a revenue mix that tilts toward restructuring and away from leveraged finance. Expect interviewers to ask how the macro backdrop is reshaping deals this summer.
Interview angle: "Friday's jobs print moved the market from pricing cuts to pricing a hike, which lifts the discount rate in any DCF and raises the all-in cost of LBO debt. At the margin that pushes sponsors toward less leverage and pulls bank revenue toward restructuring."