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Rates Decline As Strong Payrolls Report Not Supported By New Data

Rates declined signficantly this week as last week's robust payrolls data increasingly appears to have overstated the health of the U.S. labor market and economy. The week's economic release calendar was light, but the data was decidely negative. Wednesday's consumer price index data showed that prices fell for a third consecutive month, raising the worrying specter of deflation.

Thursday's weekly initial jobless claims data did show a decline in the number of new applications for unemployment insurance; however, that number was still a staggering 1.54mm. The number of those continuing to receive benefits similarly fell slightly, but the fact that nearly 21mm American workers (out of a labor force of approximately 165mm) remain unemployed is worrisome. The FOMC's meeting ended as expected on Wednesday with no change in

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