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Treasury Yields Whipsaw Following April Jobs Report

Disappointing payroll gains sparks rates rally
Following the April jobs report, Treasury yields and swap rates immediately fell ~10 bps to three-month lows but later erased much of the decline – the 10-year Treasury yield fell as low as 1.48% before closing the week near 1.57%.  Major US equity indices closed at record highs after a tech rally – the S&P 500 and DJIA rose 0.7%, while the Nasdaq added 0.9%.
April nonfarm payrolls fell short of expectations
Nonfarm payrolls only grew by 266k last month, falling well below the 1 million forecasted gain.  The unemployment rate also rose for the first time in over a year from 6% to 6.1%, while the labor participation rate also increased by 0.1%.  Overall employment is still 8 million short of its pre-pandemic levels.  Data breakdown:Notable employment cuts were in temporary help services and transportationPrivate payrolls rose by +218k vs +708k in MarchManufacturing payrolls fell by -18k vs +54k in March
Minneapolis Fed President Neel Kashkari says labor market will “take time” to recover
In a conference following the employment report, Kashkari compared the current job market to 2009’s and commented, “It’s going to take time. I don’t want it to take 10 years. Hopefully, we can put this back together in a year or two. But I just don’t want to declare victory prematurely.”  He remains in support of the Fed’s current policy approach, as it will “allow the labor market to recover” and “not just forecast that it’s going to recover.” 
Happy Mother’s Day to all the mothers out there, have a great weekend!

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