April Employment Report Strong, But why then are bond yields so low

May 2, 2014


This morning the widely watched employment report for April was released.  During April, 288,000 new jobs were created and jobs created in February and March were revised higher by 36,000 jobs than previously reported.  No doubt about it, the report shows a stronger economy.


Also, the unemployment rate dropped from 6.7% to 6.3%, due to many persons leaving the workforce.  This number requires a bit of speculation what the lower unemployment rate means and if it suggests a stronger economy.   Many people may have been reported as looking for employment, but were really just receiving long term unemployment benefits.  Some of the people in this category may have been planning on retirement anyhow. 


Moving to a look at the bond market which has surprised many investors by its strong performance this year with the 10 Year Treasury yield dropping from 3.0% to 2.6% (up in price as the yield falls) so far this year.   At the beginning of the year, we were expecting modestly higher interest rates due to an improving economy and the Federal Reserve reducing its bond buying program.   With the economy weaker than expected earlier this year and the Federal Reserve reducing its economic stimulation, shifted the scales in favor of bonds for the short term.  The Russian aggression put additional weight in favor of bonds since they are the asset of favor to nervous investors.  



Andrew D.W. Hill, CFA                                                  

President & Co-founder

Andrew Hill Investment Advisors, Inc.

4081 Tamiami Trail North, Suite C-105

Naples, FL  34103

Direct Dial:  239-777-3188

Facsimile:   239-236-0484


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Andrew Hill Investment Advisors, Inc., is registered as an investment advisor with the State of Florida and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements.  


Please contact Andrew Hill Investment Advisors, Inc. if there are any changes in your financial situation or investment objectives, or if you wish to impose, add or modify any reasonable restrictions to the management of your account.  Our current disclosure statement is set forth in Part II of Form ADV and is available for your review upon request.




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