Good Friday AM,

Today began with Nonfarm Payrolls coming in at 379k vs 182k forecast.  Last month’s numbers were revised up to 166k from 49k.  The unemployment rate ticked down a hair without being offset by a drop in the labor force participation rate.  The hourly work-week returned to more normal levels after hitting a record high in the last report.  All of these factors speak to the reopening of various local economies (and the report itself confirmed a massive resurgence in leisure/hospitality/wait-staff).

Taken together with yesterday’s Powell speech (in which the Fed chair completely avoided throwing a bone to concerns over the recent rate spike), this could easily add to the case for even higher rates than we’ve already seen.  In fact, it did just that at first.  Previous highs of 1.614% in 10-yr yields gave way to fresh highs of 1.626% this morning. Yes, bonds opened weak as you would expect, but have since turned around all their losses and now trade at the highs of the day, and above yesterdays close.

Looking back to yesterday, which was the catalyst for the recent run up in bond yields (rates), Fed Chair Jerome Powell left bond investors underwhelmed by his comments on the Treasury market. While he did reaffirm the central bank’s commitment to remaining accommodative, he did not try to reign in the selloff. This lack of comment only served to fuel further selling yesterday, with the yield on the 10-year Treasury at 1.56% this morning. The Fed is not the only central bank having to deal with market expectations, with a majority of economists surveyed by Bloomberg saying they expect the European Central Bank to step up the pace of purchases to counter rising bond yields

How about this number… 202%.  That is the projected federal debt level relative to U.S. gross domestic product by 2051, according to a report from the nonpartisan Congressional Budget Office. The forecast doesn’t take into account the proposed $1.9 trillion coronavirus aid bill making its way through Congress.

Please remain safe and healthy, enjoy the weekend, make today great!