Bond yields have been rising around the globe for the last few weeks as central bankers discuss the continued normalization of monetary policy. The unprecedented monetary policy used since the financial crisis in 2008 is slowly being removed. Despite the reduction in stimulus, monetary policy is still accommodative. I expect the trend of rising rates will continue over the next few months as the supply and demand equation for debt is being reevaluated amid less support from central banks.
Last week the June employment report bounced back from May's disappointing numbers, adding 222,000 jobs versus 178,000 expected. The unemployment rate ticked up by 0.1% to 4.4% as more workers have rejoined the workforce. Average hourly earnings remain subdued, increasing 0.2% for the month and 2.5% for the past year.
This week the markets will be closely watching Janet Yellen's semi-annual testimony to Congress beginning on Wednesday. I expect her to reaffirm the economy’s strength and the normalization path for monetary policy.
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