The month of May began with a flurry in the bond market, as Wednesday's FOMC meeting and Friday's employment report triggered sizable moves in bond yields. Rates ended 3-5 bp higher this week despite declining after Friday's strong jobs report. That release indicated that 263,000 jobs were added in April, outpacing economist expectations of 190,000 new jobs. The unemployment rate fell to 3.6%, marking the lowest reading in 50 years, as the rate dropped below this century's previous low of 3.8% in early 2000.
Wednesday's FOMC meeting concluded, as expected, with no change to the Fed funds target. However, the Committee lowered the rate paid on excess reserves at the Fed by 5 bp, to 2.35%. The FOMC's statement accompanying the decision alluded to the risks of lower inflation. However, Chairman Powell's remarks indicated that the FOMC believes that the forces pushing inflation lower are transitory, reducing the already-low odds of a 2019 rate cut.