April's Employment report was released at 8:30 AM ET this morning, revealing the U.S. unemployment rate stood at 6.1%, up from March's 6.0% and higher than forecasts of 5.8%. Also, only 266,000 jobs were added back to the economy during the month, falling significantly short of the 950,000 that was expected. Both of these readings show the rebound in the sector that many had predicted is not happening yet. Those numbers are very good news for bonds and mortgage rates. They also should be a heavy burden on stocks, but we have not seen that yet.
There was data in the report that is concerning to bond traders. Average hourly earnings spiked 0.7% when it was predicted to remain nearly unchanged. Rising wages are a sign of wage inflation that can spread to other parts of the economy, making bonds less appealing to investors. Fortunately, the other two headline numbers appear to be having the biggest influence on this morning's trading.
Next week brings us another batch of important economic data, including two inflation indexes and a key measure of consumer spending. In addition to some moderately important data, there also will be a couple of Treasury auctions that can influence rates. Activities don't start until mid-week, meaning we should see the most movement in rates the latter days. Look for details on all of next week's calendar in Sunday evening's weekly preview.
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