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Lower Bond Yields Amid a Quiet Market

Treasury yields drifted lower this week, as a relatively light economic calendar left markets reliant on the political back and forth regarding tariffs to provide some direction.  Bonds also reacted to statements from Fed Chair Powell in which he reiterated the case for continued increases in the Fed's overnight rates target.  Although the projected path of Fed funds would almost certainly cause the yield curve to invert, the Fed sees stable inflation and falling unemployment as signs that tighter monetary policy is necessary. 

The labor market's strength continued this week, with just 218,000 new applications for state unemployment benefits.  The strength in the labor market hasn't resulted in higher home sales, as existing home sales unexpectedly declined in May.  However, economists seem united in their view that the problem isn't one of demand, but rather very low housing supply.

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