Our view on rates this week is that the most widely followed indicators are sending different signals, but short term rates are likely to be steady with upward pressure on long-term rates. Increased volatility is likely as the markets adjust to the new qualitative guidance from the Fed.
Here is what we are watching:
Back to the Future
The U.S. added 192,000 jobs in March with the unemployment rate holding steady at 6.7%. Total private payrolls reached 116.1 million, finally surpassing pre-recession highs. Employment numbers were also nudged higher for January and February.
In sum: Moderate improvement in the labor market means that the Fed will continue to gradually reduce stimulus while keeping interest rates low.