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
Visit us on the web: www.responsibleadvisors.com
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