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Payrolls Report Boosts Yields

A gradual increase in market yields early in the week got a boost on Friday as an unexpectedly bullish monthly payrolls report boosted yields and propelled US equities to a 5% weekly gain. Markets overlooked the widespread social unrest across the U.S as the tech-heavy NASDAQ approached record levels and bond yields recovered as the US economy slowly reopened. The advance in yields was turbocharged by Friday's news that the U.S. added 2.5mm new jobs in May, defying consensus estimates of a 7.5mm decline in jobs.

The unemployment rate fell from 14.7% to 13.3% while economists expected it to rise to 19.0%. Even the "negative" components of the report had positive indications, as a decline in earnings was caused by increased employment in the lower wage sectors which were hardest hit initially. The bullish results came as a suprise to virtually everyone and supported the few remaining forecasts of a quick V-shaped economic recovery.

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