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Change in Tone Sends Stocks and Yields Higher

The prospect of a defusal in the budding trade war between the U.S. and China helped stabilize markets and send yields higher this week.  The market seized on Chinese President Jinping's pledge to increase trade openness as well as President Trump's reconsideration of participation in the Trans-Pacific Partnership to buoy stock markets.  Bonds sold off as risk assets came back into favor, pushing benchmark yields higher by 5-10 bps. 

The week's economic indicators, as well as the release of the FOMC's March meeting minutes, arrived largely as expected.  The primary takeaway from the minutes was that the Fed's desired rate path remained intact, despite concerns over the impact of the recent tax code changes as well as the potential for trade conflict.  On Thursday, the weekly initial jobless claims number remained low and surpassed the previous streak of 162 consecutive weeks under 300,000 claims - a  mark previously reached in 1970 when the labor market was significantly smaller.

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