The April nonfarm payroll print landed at 115,000 against a 65,000 survey — the strongest two-month gain since 2024 and a clean beat by every retail-headline measure. The bond market did not buy it. The 10-year traded down to 3.94% on the print. The 2-year held. The curve flattened modestly. Yields fell on a hot jobs number, which is the tell.
Three things sat underneath the headline that the bond desk saw immediately. The two-month net revision came in at negative 16,000, taking the prior-month figure from 178K to 162K. Average hourly earnings printed 0.2% month-over-month against a 0.3% survey, with the year-over-year at 3.6% versus 3.8% expected. The three-month payroll average is now 48,000, down from 68,000 a month ago. Strong topline, softening underneath, decelerating trend. The bond market priced the trend, not the print.
Credit held in. Bloomberg Aggregate OAS finished the week at 27, drifting tighter from the late-March widening that peaked above 32. US Corporate OAS at 78, IG Aggregate at 26. No stress signal in spread land — which is its own piece of information when the geopolitical and labor backdrop is what it is.
The week's most important fixed income story did not come from the labor data. SoftBank cut its target for the OpenAI margin loan by 40% to $6 billion. That is the smart-money tell on private credit's largest single AI exposure. The standing thesis on software ARR as collateral — that AI is structurally impairing the recurring revenue streams backing private credit loan books — got a real-money validation from one of the most levered participants in the trade. When SoftBank trims AI margin financing by 40%, the bond market notices.
Powell editorialized on Fed independence midweek. Oil held above $95 on the Iran ceasefire holding but trust draining. Gold ripped to $4,723. The Federal Reserve remains on hold and will stay there while the inflation and oil shock plays out.
Bottom line. The bond market read the week correctly. The headline payroll number was the loudest signal and the least useful one. Wages decelerating, revisions negative, three-month trend softening, and SoftBank pulling AI exposure — that is the actual setup heading into next week.
The Wednesday Companion will develop the SoftBank-OpenAI margin loan cut against the broader software ARR collateral thesis. Saturday's Weekend Deep moves to Position 1 — Apollo, Athene, and the insurance float playbook.
Educational and macro commentary only. Not investment advice. Views are my own and do not represent any employer or affiliated entity. Subject to CFA Institute Standards of Professional Conduct.