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April Jobs Report Confirms Record Unemployment, Yields Mixed

Treasury yields were mixed this week while equity markets were resurgent as the S&P 500 added over 3%.  Yields declined on shorter-dated issues, while longer maturity bonds managed to post slight yield advances, further steepening the yield curve.  The interest rate differential between the two- and ten-year Treasury is now 0.54%, providing excess yield for longer duration fixed rate investments. 

The week's economic calendar was predictably awful, but Friday's monthly employment report garnered the most attention as it summarized the extensive damage done to the labor market over the past six weeks.  The report indicated that employers cut 20.5 million jobs in April, sending the unemployment rate soaring to 14.7%.  As bad as that reading is, it likely understates the horrible condition of the labor market.  For example, the increase in the unemployment rate was restrained by a huge 2.5% decline in US labor force participation, excluding those individuals from being officially unemployed.

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