Bond Market Update

Data Recon

• Nonfarm payrolls surged by 172,000, aided by a 52,000 increase in government jobs; the unemployment rate held steady at 4.3%, along with the labor force participation rate (61.8%), and average hourly earnings increased 0.3% month-over-month.
  • The key takeaway from the report is that it is manna for headline writers but still lacks some important sustenance to suggest it is a marker of an economy running on a full stomach. To wit: real average hourly earnings on a year-over-year basis are down 0.4%; there were job losses in the retail trade (-1,100), information (-2,000), and financial (-22,000) industries; and the percentage of unemployed workers for 27 weeks or more increased to 27.5% from 25.3%, which we will assume speaks to the difficulty of finding a new job with comparable compensation to the prior one.
• Yield Check:
  • 2-yr: +9 bps to 4.14%
  • 3-yr: +9 bps to 4.19%
  • 5-yr: +8 bps to 4.27%
  • 10-yr: +6 bps to 4.54%
  • 30-yr: +3 bps to 5.01%