Bond Market Update

Data Recon

• The weekly initial jobless claims report held some good news. Initial jobless claims for the week ending May 3 decreased by 13,000 to 228,000 (Briefing.com consensus 238,000), while continuing jobless claims for the week ending April 26 decreased by 29,000 to 1.879 million.
  • The key takeaway from the report is the step down in initial jobless claims -- a leading indicator -- from the prior week, as it leaves initial claims at a level that is consistent with a fairly solid labor market and far from recession-like levels.
• The preliminary Q1 Productivity Report held some bad news. Nonfarm business sector labor productivity decreased 0.8% in the first quarter (Briefing.com consensus -0.4%), with output down 0.3% and hours worked up 0.6%. That was the first decline in productivity since the second quarter of 2022. Unit labor costs surged 5.7%, reflecting a 4.8% increase in hourly compensation and a 0.8% decrease in productivity.
  • The key takeaway from the report is the jump in unit labor costs stemming from the weak productivity, although the first-quarter earnings reports in aggregate have not conveyed any strong profit margin pressures as a result of higher labor costs.
• Yield Check:
  • 2-yr: +3 bps to 3.82%
  • 3-yr: +3 bps to 3.79%
  • 5-yr: +3 bps to 3.90%
  • 10-yr: +2 bps to 4.30%
  • 30-yr: +1 bp to 4.79%