Weekly Market Update

STEADY JOB MARKET NUMBERS DRIVE LOW YIELDS

Thursday, April 13, 2017

The U.S. job market looks steady despite low March payrolls. Unemployment is low, earnings growth is on target, and the number of discouraged workers reached its second-lowest point since the financial crisis in 2008. The low payrolls number is partially due to bad weather in the Northeast. Soon after the March employment report, U.S. 7-year, 10-year and 30-year yields all reached their lowest levels since mid-January of the year. Overall, the bond market was not affected negatively. Bond traders' expectations about the Federal Reserve remain mostly unchanged, and the Fed will likely stick to its plan to increase interest rates twice more this year.

In Other News

  • Due to a tight legal job market, the American Bar Association (ABA) put several law schools on probation, including the for-profit Arizona Summit Law School, related to low pass rates on bar exams.
  • The U.S. Congress is looking to bring back year-round Pell Grants, allowing students to use the grants for summer schools. The cost of this bill will likely be offset by cutting Pell surpluses. Whether the provision can pass the House remains uncertain.
  • The Trump administration is still working on a tax code overhaul, but the timeframe is unclear. White House economic adviser, Gary Cohn, responded that a correct tax plan is better than speedy action. He also signaled that the plan may include the controversial border-adjusted tax.
  • New York State will offer free tuition to low-income state residents who attend the State University of New York or the City University of New York. The program will start in the fall of 2017, and it is the first of its kind for middle-class families, but some lawmakers still doubt the program's real effect.
  • Rider University, Westminster Choir College's parent institution, is considering selling the choir college as a package or by divesting itself of the college and its land separately. Faculty members, students, and alumni of the college have expressed opposition to the sale.
  • Education Secretary, Betsy DeVos, withdrew a pair of memos issued during the Obama administration. The memos served to streamline the student loan servicing industry and to improve student loan debt collection. DeVos argued that the memos were expensive and inconsistent, and she aimed for a more accountable and transparent loan servicing environment.

Rating Agency Update

  • Moody's assigned A2 to Iowa Western Community College's Series 2017 Dormitory Revenue Refunding Bonds. Moody's also assigned Aa1 to the College's Series 2017 General Obligation Bonds and Series 2017B General Obligation Plant Fund Capital Loan Notes. The outlook is stable.
  • Moody's assigned Aa3 to State University of New York's Series 2017A Revenue Bonds. The outlook is stable.
  • Moody's assigned A1 to Georgia Gwinnett College's Series 2017A Refunding Revenue Bonds. The outlook is stable.
  • Moody's assigned Aa2 to Carleton College's Series 2017 Revenue and Refunding Bonds. The outlook is stable.
  • Moody's assigned A1 to Union College's Series 2017A Revenue Bonds. The outlook is stable.
  • Moody's assigned Aa1 to the State University System of Florida's Series 2017A Revenue Refunding Bonds. The outlook is stable.
  • S&P downgraded Merrimack College's Series 2014 Revenue Bonds and Series 2012A Refunding and Student Housing Bonds to BBB-. Samp;P also assigned BBB- to the College's Series 2017 Revenue Bonds. The outlook is stable.
  • S&P assigned AA to University of California Board of Regents' Series 2017AV, Series 2017AW, and Series 2017AX Bonds. The outlook is stable.
  • S&P assigned AA- to University of Kansas Hospital Authority's Series 2017A Health Facilities Improvement Revenue Bonds. The outlook is stable.
  • S&P assigned AA to Pennsylvania State University's Series 2017A Tax-Exempt and Series 2017B Taxable Bonds. The outlook is stable.