Interest rates rose in response to a lackluster December jobs report. Within the report, there was an increase in hourly wages from November to December, which is inflationary and probably the reason for the sell-off in bonds. Wages also increased year over year at 2.90%, the largest increase in many years. The headline jobs number came in lower than expected with 156,000 jobs created versus 175,000 projected. The unemployment rate ticked up to 4.70% and the closely watched labor force participation rate and U6 reading ticked up as well.

Going forward, we don’t envision rates shooting straight up, however we are mindful that it’s more likely that interest rates will increase in the coming months given the President-Elect’s desire to create a more pro-business and pro-growth environment.