What is up with the bond market?

The challenges of an intermediate-term bond bull, Part 2.
JUN 16, 2014
The Labor Department reported recently that 288,000 new jobs were created in April and that the unemployment rate had plummeted to “only” 6.3%. The U.S. economy is back! Does it feel like that to you or your friends? My thesis since the crisis began has been that post-financial-crisis recoveries are frustrating. They tease and tantalize on the upside but rarely deliver. Economic growth never hits "escape velocity" and unemployment remains stubbornly high. With the government printing a 6.3% rate, that's hard to still say "stubbornly high." (See Part One: The challenges of an intermediate-term bond bull) Digging into the details a little more, the labor force participation rate fell to 62.8%, the lowest level since 1978. Almost one million people left the labor force. Zero Hedge wrote a good piece about this. With wages not growing and people giving up on looking for a job, the markets did not celebrate the 288,000 number for more than 90 seconds. Additionally, it seems like at least once over the past few years, we see a monthly print close to 300,000 new jobs created only to have cold water poured on it over subsequent months. And what did the bond market do with one with of the strongest headline numbers in years? It rallied (although it has since pulled back in orderly fashion) as if the economy did not create many new jobs or actually lost some. Remember, the actual news isn't as important as the markets' reaction to the news. Investors may blame the situation in Russia/Ukraine for the bond market's post-employment-report reaction or even longer, but that's not being genuine. If all is as well as is being projected, the bond market should be much lower than it is right now and yields on the 30-year Treasury should be in the upper threes — unless there really is something lurking out there. Paul Schatz is president of Heritage Capita.l

Latest News

Advisor moves: Atlas tops $1B as Wells Fargo, UBS add bank veterans
Advisor moves: Atlas tops $1B as Wells Fargo, UBS add bank veterans

Wells Fargo adds two bank-channel recruits, UBS lands a JPMorgan Chase veteran, and a multi-family office lifts Atlas past $1B

Advisor mom’s son used her password to log into clients’ accounts, sell deal with conflicts, according to Washington state
Advisor mom’s son used her password to log into clients’ accounts, sell deal with conflicts, according to Washington state

“The state comes down on you in years when you make 40% returns for clients,” said Bill Swayne, the advisor and son of Candace Swayne.

Osaic in talks with Anthropic as AI reshapes advisor workforce
Osaic in talks with Anthropic as AI reshapes advisor workforce

The Independent broker-dealer giant has had “active conversations” with the Claude maker, which is days away from its expected IPO

The retirement milestone advisors aren't tracking
The retirement milestone advisors aren't tracking

For Gen X clients entering life after work, answering the financial question isn't enough to solve the entire retirement equation.

Wealthtech firms target stock pay, pensions and heirs for advisors
Wealthtech firms target stock pay, pensions and heirs for advisors

Tools from Grantd, Income Lab and Healthspan Wealth aim to keep RIAs involved in clients’ biggest money decisions

SPONSORED Best Practices for Engaging Women Around Alternatives

Growing wealth, evolving priorities, and untapped opportunities are reshaping how women approach long-term investing.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.