Looking Ahead to U.S. NFP

As investors desperately attempt to discern the pace of economic growth, Friday’s employment report could shed some much-needed light on where America is heading.

Over the past week, some troubling signs about the US economy have emerged. On Friday, Q1 GDP growth was revised down to negative 1 percent. And Treasury yields continued to plunge, with the all-important 10-year yield slipping as low as 2.4 percent, the smallest yield since June 2013. Since yields tend to track growth and inflation expectations, this could be interpreted as a signal that investors have become more pessimistic.

On the other hand, US yields have largely followed European yields lower. And the soft GDP print actually boosted some economists’ expectations of what the next few quarters could bring, given that it could lead to a strong bounce-back in the second quarter and beyond.


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