Wellspring | June 10, 2019

A weekly summary of news, analysis and data shaping the market.
U.S. Job Growth Slows in May

The U.S. economy added 75,000 jobs in May on a seasonally-adjusted basis, according to data released on Friday by the Bureau of Labor Statistics. Analysts had been expecting an increase of 185,000, which would have been consistent with the year-to-date average increase in employment of just over 200,000 jobs per month.

In addition, the previous estimates for job growth in March and April were revised lower by a total of 75,000, which means the BLS now believes 820,000 jobs were added in the first five months of 2019. That average probably reflects underlying economic conditions much better than the substantial month-to-month variation observed during that period.

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Bond Yields Extend Drop Toward 2%

The yield on benchmark U.S. government bonds hit new 2019 lows near 2% on Friday, a sign investors believe a slowing economy will spur the Federal Reserve to cut interest rates.

The yield on the U.S. government’s 10-year Treasury note, which falls as bond prices rise, dropped as low as 2.055% according to Tradeweb after an unexpectedly weak jobs report showed wage gains missing analysts’ expectations, signaling inflation remains muted. Investors watch the 10-year Treasury yield as a barometer for the health of the economy because it helps set borrowing costs for everything from mortgages to corporate loans. It tends to fall when investors are worried about economic growth, so its retreat from multiyear highs hit in November has rattled financial markets and sparked fears of a coming recession.

States Prepare to Launch Investigations Into Tech Giants

State attorneys general are preparing for their own investigations into big tech platforms including Google and Facebook, based on concerns that largely mirror those driving probes by the Justice Department, the Federal Trade Commission and Congress.

That is adding to regulatory headaches for the tech giants, and potentially adding to the pressure on federal officials. The U.S. Justice Department and the Federal Trade Commission recently agreed on a plan that would clear the way to examining potential antitrust issues with several big U.S. tech firms.

Trade Risks Prompt Predictions for Federal Reserve Rate Cuts

Federal Reserve officials are closely monitoring the recent escalation in trade tensions, and Chairman Jerome Powell indicated Tuesday officials could respond by cutting interest rates if the economic outlook deteriorates.

He didn’t say whether he thought that would be needed. “We do not know how or when these trade issues will be resolved,” Mr. Powell said. President Trump has pursued tariffs and wants the Fed to cut rates. Economists are projecting that uncertainty created by the administration’s actions on the former will prompt the Fed to deliver the latter later this year.

New Apple Sign-In Option Could Keep More Personal Data Away From Facebook, Google

Apple Inc.'s plan to allow anonymous sign-ins on mobile apps to protect users' privacy threatens to choke off data to companies including Facebook and Google that use the information to track users and sell ads based on their habits.

When the iPhone maker releases its new mobile operating system this fall, apps downloaded through Apple's App Store that offer sign-ups through a third-party social-media account such as Facebook will have another alternative: clicking on an Apple icon to generate a random email address so that users can participate without revealing any personal information.

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