Lost Jobs and More Bonds

As expected, ADP Payroll Services announced this morning that the economy lost 20.236 million jobs in April and that was slightly less than the 20.5M that was forecast. Also released this morning was a report showing that Mortgage Applications rose by 0.1% for the week ending May 1. The prior week’s tally posted a decline of 3.3%.

Treasury bond prices are being driven lower this morning as credit markets wrestle with the news that a lot of supply is coming to the market. Treasury Secretary Mnuchin announced that the Treasury’s Quarterly Refunding will be increased to a record high of $96B and a new auction for 20-year bonds will be held. The Treasury also plans to increase the duration of new debt with the issuance of longer-dated coupon-bearing issues with less emphasis on short-term bills. The magnitude of supply and characteristics of new maturities has implications for potentially affecting the behavior of the yield curve.

The closely watched Ten-Year has lost about a half-point in price and its yield has risen to around 71 basis points. Meanwhile, WTI for June has slipped by not quite $2/barrel to around $22.75. Gold has lost around $17/ounce to around $1,690. The DJIA is set to open slightly in the green.