In 2019's first holiday-shortened trading week, bonds resumed 2018's pattern as volatility in stock markets drove yields lower. The five-year Treasury note has now shed 60 bps of yield since November, breaking below 2.50%. A strong labor market report and comments from Fed Chair Powell on Friday rescued bond yields from a more precipitous decline, as both stocks and bond yields rallied substantially on Friday.
The week's early losses were due to Apple's lowered sales forecast and a drop in factory orders. Increasingly, the market is evaluating economic releases based upon their perceived ability to forecast economic conditions, rather than report on existing or historical data.
Accordingly, Friday's blockbuster December payrolls report (312k jobs added vs. 184k forecast, monthly wage growth of 0.4%) didn't significantly move markets until Chair Powell's remarks. He indicated that the Fed is receptive to adjust their balance sheet normalization if necessary.