Employment data dominated the economic releases for the week as the unemployment rate ticked higher to 3.9%, the highest level since January 2022.
Also, the increase in non-farm payrolls registered 150,000, below the anticipated increase of 180,000. Not only was the monthly increase lower than expected, but revisions were also made to the results for the prior two months which reduced totals for those months by 101,000.
Across private sector industries only 52.0% reported increased levels of employment which is the lowest since April 2020. This month’s employment report was negatively impacted by the UAW strike in place against domestic auto manufacturers.
The moderation in the employment data was a significant boost to the spirits of investors as they interpreted the results as further support for the Federal Reserve ending increases to the Fed Funds rate and potentially starting the process of reducing the rate. Both stocks and bonds were beneficiaries of the improved mood.
The 10-year Treasury saw its yield decline from 4.7% to 4.5% which translated into a weekly return of 1.7% for broad bond market indices. Bonds have now improved to the point where their total return is virtually flat on a year-to-date basis coming in at – 0.2%.