Jobs, Stocks, And Bonds, Oh My!

The initial reaction to Friday’s BLS jobs report was a yield surge and a sharp stock decline.  Stock investors are finally noticing higher yields. While sentiment can certainly cause stocks and bonds to deviate from fundamentals, at the end of the day, they both have fundamental roots in economic activity. Over the past couple of Commentaries, we have shared data showing that the recent increase in bond yields is due to poor sentiment. Before this past week, the stock market didn’t seem concerned about higher interest rates resulting from the negative bond sentiment, aka higher term premiums.