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Yields Decline Despite Lowest Unemployment Claims in 44 Years

Yields fell once again this holiday-shortened week as investors continued to flee the volatility in equity markets.  The first quarter ended Thursday with the first quarterly decline in 2.5 years.  The week's economic indicators were almost uniformly positive, as the latest estimate of 4Q 2017 GDP was revised higher, weekly initial jobless claims fell, consumer sentiment measures remained high, and personal incomes rose in February. 

The 215,000 initial claims for state unemployment benefits marked the lowest such reading in over 44 years. The 0.4% gain in personal income matched the gain registered in the prior two month, and is leading to forecasts of increased spending from consumers.  A strong labor market, in combination with further gains in home values, is consistent with the Fed's expectations and will likely lead to another Fed rate hike this summer.

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