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Strong Payroll Report Leaves Yields Slightly Changed for Week

The yield curve flattened slightly this week, as longer yields ended the week slightly lower while two to five year Treasuries climbed a few bps. Yields across the curve were set to end the week lower until Friday's monthly payrolls report triggered a sell-off in bond markets, pushing yields higher. The report was stronger than expected, as 1.37 million jobs were added in August as the labor market continues to claw back from its precipitous decline due to the coronavirus epidemic.

Even with the gain, employment remains 11.5 million below the pre-pandemic level. The jobs number was helped by the temporary hiring of 238,000 new census workers. The rest of the week's economic data largely followed the same template, as gains in factory orders and a decline in unemployment insurance claims demonstrated gains over prior periods, despite falling far short of levels earlier in the year.

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