Yields decline on hot jobs data. Treasury yields fell to intraday lows in the aftermath of April’s labor report, which marked the first two-month jobs gain in almost a year. Meanwhile, markets are monitoring Iran’s response to the latest US peace proposal, which the US expects imminently. The 2-year yield closed 3 bps lower at 3.89% (up 1bp on the week), while the 30-year yield closed 2 bps lower at 4.93% (down 3 bps on the week). Equities rallied with semiconductor chipmaker stocks leading the way. The S&P 500 closed 0.84% higher at 7,399, while the technology-heavy NASDAQ closed 1.71% higher at 26,247.
Jobs data surprise hints at momentum in the labor market. The US economy added 115k jobs in April following March’s revised gain of 185k, marking the strongest two-month stretch for job growth since 2024. Private payrolls rose by 123k last month, beating forecasts of 75k after a 190k increase in the prior period. Healthcare continued to lead gains, while transportation and warehousing and retail trade posted their largest increases since 2024. Meanwhile, the unemployment rate held steady at 4.3%, in line with expectations. Olu Sonola, head of US economics at Fitch Ratings, stated, “the labor market is not booming but it is proving harder to break than many feared.” Other data released this week also point to labor market stabilization, though experts worry that a prolonged conflict with Iran may begin to weigh on hiring.
Consumer sentiment tumbles to record low. The University of Michigan consumer sentiment fell to a record low of 48.2, from 49.8 in April, as consumers are worried by the potential impacts of inflation. The survey showed that consumers expect an inflation rate of 4.5% over the next year, slightly below 4.7% last month. Meanwhile, the April CPI report will be released on Tuesday and the April PPI report on Thursday. Core CPI is expected to come in at 2.7% YoY, an increase from 2.6% in March and well above the Fed’s 2% target level. PPI, excluding volatile food and energy categories, is expected to print at 4.3% YoY, a sharp increase from 3.8% in March.
