Bond yields fell this week as markets assessed the health of the US economy and the labor market in the wake of war in the Middle East that has sent oil prices surging to their highest level since 2022. On Tuesday, the Job Opening and Labor Turnover report, or JOTLS, showed job openings fell 358k in February, hires plunged 498k and quits fell 157k while layoffs ticked up 61k. That is exactly why we call this a “low hire, low fire” labor market – businesses are hiring fewer people (possibly due to AI?) and workers are quitting less (no confidence they could get rehired somewhere) so businesses are posting fewer job openings, but they’re not yet laying off workers in significant numbers. In fact, the hire rate (the number of people hired as a percentage of total employment) in February matched the lowest level since 2010 when the economy was still reeling from the global financial crisis. Despite the weak February JOLTS data, the US economy added 178k jobs in March, significantly better than economists had estimated and a sharp rebound from the 133k loss of jobs in February. The unemployment rate also fell to 4.3% which would normally be good news, but it largely came because 488k workers left the labor force, not something you normally see in a healthy job market.
Outside of the labor market, the economic news for the week was pretty good. Consumer confidence unexpectedly rose, retail sales were up, the manufacturing sector expanded for the third week in a row, and the trade balance was better than expected.
The focus for next week will be Friday’s March CPI report which is expected to show a monthly increase of 1.0% and a 3.4% increase year-over-year, well above the Fed’s inflation target of 2%. Fed funds futures are now pricing in a near 0% chance the Fed will move rates at all this year.
Source: Bureau of Labor Statistics
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Ryan W. Hayhurst
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