Labor market improving
Weekly Bond Commentary
The election was the largest issue last week, of course, but the labor market had news of its own. The Labor Department reported that nonfarm payrolls rose in October by 638,000 jobs, with a positive revision of 15,000 jobs in August and September. It also said the unemployment rate fell to 6.9%, an unexpected development as it was at 7.9% in September. The underemployment rate similarly decreased, to 12.1% from Septembers 12.8%, and the labor force participation rate rose to 61.7% in October from 61.4% in September. The latter might not seem like the magnitude of the other rates but shifts in this metric are generally smaller and it is especially important given the amount of people who were laid off during the continuing pandemic.
“Continuing” is the key word here as Covid-19 has surged and is expected to rise more as the cold weather puts us all inside. But the chance that we have a vaccine in place is growing and state and local governments are not forcing the same lockdown seen in spring.
With the election called for Biden, once the Trump administration concedes and a stimulus package arrives likely soon after, we should see yields rising. One caveat, though, comes from the Federal Reserve, which made clear again last week it is committed to low rates for a long time.