Daily Market Color April 7, 2017Treasurys End Lower After Volatile Session Amid Geopolitical Tension, Mixed Payroll Data The US jobs report released today displayed a meager 98,000 increase of nonfarm payrolls for the month of March. The headline figure fell well below expectations of a 180,000 gain, prompting an immediate flight to quality in financial markets which later reversed after details in the report provided a more encouraging employment outlook. Initially projected to hold steady at 4.7%, the unemployment rate unexpectedly fell to 4.5%, its lowest reading in over nine years even as the participation level remained steady. Additionally, underemployment touched its lowest levels since the 2008 financial crisis, suggesting that future wage increases may be in store, a welcoming forecast given that average hourly earnings only managed a 0.2% rise in March after previously increasing 0.3% in February. Despite today’s low payroll reading, the cause of which was mainly attributed to the snowstorm mid-month, 2017’s first quarter average of nonfarm job creation stands at 178,000/month – nearly the same pace recorded for all of 2016. The beginning of today’s session saw demand in safe haven assets following the overnight American air strikes made against Syria. The Trump administration’s decision to use military force drew mixed responses from nations abroad, but the overall market reaction was one of caution. The news, combined with the subpar headline payroll figure, sparked a sharp rally in US Treasurys to begin the trading session, however all gains were more than reversed throughout the course of the day as tensions eased. Also contributing to the late selloff in US bonds was hawkish commentary from Federal Reserve President of New York William Dudley, who stated his expectation that an unwinding of the Fed balance sheet would not temper the pace of interest rate hikes going forward. Yields/swap rates are currently up 2-7 bps across the curve, with the yield on the 10-year note finishing the week near 2.38%. All three major US stock indices closed just below even on the day, recovering most losses incurred early on. Crude oil continued to surge, hitting its highest levels in more than a month and settling up 1% for the session, as WTI finished at $52.30/barrel and Brent at $55.20/barrel.