Weekly bond commentary
The labor markets were front and center last week, as markets try to assess the current impact of the coronavirus on the economy.
Weekly jobless claims showed a welcome drop. At just below 1.2 million claims, they are still well above early 2020 levels, and continuing claims were 16.1 million, down again, but still reflecting a nearly 10% unemployment rate.
The monthly employment report confirmed the labor market continues to recover. The large gain of 1.76 million jobs cut the unemployment rate from 11.1% to 10.2%, still very high when compared to the 3.5% of early 2020. But over the last three months, the economy has recovered 9.3 million of the 22.2 million jobs lost in March and April. But this also underscores the long slog ahead. Also worrying is the 26,000 gain in manufacturing employment, much smaller than June’s robust 357,000 gain. Over the last three months, the economy has regained fewer than half of these higher-paying lost jobs.
On balance, the economy continues to recover, but overhanging everything is progress on prevention and treatment of the virus. Fear of contagion is preventing businesses from operating normally and consumers from doing what they do best: shop.
Treasury yields rose modesty this week from last, with the 2-year yield rising 3 basis points to 0.14%, the 3-year yield increasing 2 basis points to 0.14% and the 5-year yield moving up 2 basis points to 0.23%.