The pace of employment growth at US companies bounced back sharply in June after slumping to a five-year low in May, the Labor Department reports. The gain, which beat expectations by a wide margin, suggests that the economy is stronger than the May release implied. But note that the year-over-year gain in private payrolls, although fractionally higher, is essentially unchanged from May, holding close to a three-year low. In sum, there’s still no smoking gun for arguing that the US slipped into a new NBER-defined recession, but the weak numbers from other corners of the economy—industrial production, for instance—continue to raise questions about the outlook for this year’s second half.
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The 10-year Treasury yield yesterday took a breather from plumbing new record lows, but it’s not obvious that the 35-year slide in interest rates is over. The benchmark rate ticked up to 1.40% yesterday (July 8) via Treasury.gov’s daily data, a whisker above Monday’s all-time low of 1.37%. All the usual caveats apply for deciding if even lower yields are coming. But if the rest of the world offers a clue (such as the expanding tide of negative rates), it’s premature to bet against a multi-generational trend that’s confounded almost everyone who studies the bond market.
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