Last week's March employment data release disappointed market expectations as the economy added 98,000 jobs–about 100,000 less than estimates and the average gains experienced over the last six months. Average hourly earnings remained stable at a 2.7% year-over-year gain. On the positive side, the unemployment rate fell by 0.2% to 4.5% in March, which is the lowest rate since 2007. I expect the April employment number will be strong as the overall improvement in the labor market continues.
In the week ahead, I will be watching the Treasury bond auctions to see if demand for Treasuries remains strong. This is the first auction since the Federal Reserve (Fed) minutes noted the Fed could start to reduce its balance sheet or pare back the amount of quantitative easing. I expect foreign demand to continue to be on the weak side given the increase in global rates and the prospects for more issuance by the Treasury.
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