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FOMC Keeps Fed Funds Target Unchanged

Another eventful week in the fixed income markets ended with yields only slightly changed, as investors reacted to the FOMC's mid-week meeting and April's employment report, which was released on Friday.  As expected, the Fed's Open Market Committee meeting ended with a decision to keep the Fed funds target unchanged.  The statement accompanying the Committee's decision was supportive of a 25 bps rate increase at their next meeting in June, which is consistent with the market's expectation. 

Friday's payrolls report delivered more good news for the economy, as the unemployment rate dipped to 3.9%, the lowest rate in 18 years.  The economy added 164,000 jobs in April, which was less than forecast, but well above the number needed to absorb new entrants into the labor market.  The modest gain in hourly earnings was the only negative note in the report, as worker wages are not yet reflective of the labor market's tightness.

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