Bond Market Update

Data Recon

• Nonfarm payrolls declined by 92,000 in February (Briefing.com consensus: 60,000). Revisions for December and January combined were 69,000 lower than previously reported. The bright spot was average hourly earnings, which jumped 0.4%, leaving the year-over-year increase at 3.8% versus 3.7% in January, and real earnings on a positive trajectory.
  • The key takeaway from the report, however, is that it muddles the economic view for the Fed, too, with its twin planks of negative job growth and higher wage inflation. Accordingly, look for the Fed to sit on its policy hands, unwilling to cut rates for now as it also contends with the spike in oil prices and the uncertainty of the Iran war.
• Total retail sales were down 0.2% month-over-month in January (Briefing.com consensus: -0.1%) following an unchanged reading for December. Excluding autos, retail sales were flat (Briefing.com consensus: 0.2%) for the second straight month.
  • The key takeaway from the report is that sales activity was disrupted by the winter storms, so the result isn't as disappointing as it looks, which comes through in the fact that nonstore retailer sales were up a robust 1.9% month-over-month.
• Yield Check:
  • 2-yr: -1 bp to 3.59%
  • 3-yr: -1 bp to 3.61%
  • 5-yr: UNCH at 3.75%
  • 10-yr: +1 bp to 4.15%
  • 30-yr: +1 bp to 4.76%