Daily Market Update 6/5/09

Interest rates rose sharply Friday following the Non-farm Payrolls report for May. The U.S. economy lost 345,000 jobs for the month, far below consensus forecast of -525,000. The Unemployment Rate jumped to 9.4%, the highest level in 25 years. Mortgage rates have risen by about 3/4% in the past two weeks, largely due to debt supply concerns. Investors in Treasurys and mortgage-backed securities have become increasingly nervous about the massive budget deficits and apparent lack of fiscal discipline of the Federal government. Reports surfaced this week by analysts saying that China and other foreign investors are choosing to invest in shorter-term US bonds rather than longer-term bonds due to growing fears of future inflation stemming from current economic policies. The Treasury will auction $65 billion in 3-, 10-, and 30-year notes next week. Retail Sales figures for May will be released Thursday.