Week Ending: April 3, 2026

Hiring Halt

Recent jobs data have been volatile, with 5 of the last 10 months alternating between positive and negative readings. Some investors attribute the monthly volatility to idiosyncratic events, while others point to slowing immigration and an aging population. Nonetheless, the big picture is that the labor market has weakened substantially since 2022. One way to look at it is the hiring rate, which has dipped to the lowest since October 2021, according to data released this week for February. What’s driving the slowdown? It’s complicated: Workers are not switching jobs from firm to firm as much as they did in 2022, and people outside the labor force (those not actively looking for jobs) are not returning to the workforce. More importantly, fewer unemployed workers are getting hired. In 2022, over 30% of unemployed workers found a job the month after; today, less than 24% do. The average duration of unemployment among workers has also increased by 36% since 2022. Regardless of what the nonfarm payroll data show on Friday, the bigger picture is that the U.S. labor market is characterized by lackluster hiring.

Highlights of the Week:

High Yield: The high-yield bond market has remained relatively resilient amid recent geopolitical stress, with its meaningful energy exposure helping to buffer the asset class. While spreads have moved modestly wider, the adjustment reflects a macro repricing rather than any meaningful deterioration in underlying credit fundamentals. Overall, the high-yield bond market continues to offer a solid source of income despite a shifting macro backdrop.

Corporates: Despite the heightened volatility in March stemming from the Iran war, corporate spreads have remained well-insulated for the most part, with 1-30-year corporate spreads finishing the month just 5 basis points wider at +89 basis points.

Municipals: Geopolitical tensions in the Middle East drove rates higher, contributing to a difficult March for municipal bonds, with the Bloomberg IG Tax-Exempt Municipal Index posting its third-worst March on record, down 2.32%. The index lagged the Bloomberg HY Muni Index (-1.90%) and trailed taxable alternatives, including U.S. Treasuries (-1.74%), Taxable Munis (-2.14%), and U.S. Corporates (-1.98%), while March 2026 saw the highest municipal issuance ever for the month.

Equities: U.S. equities finished the holiday-shortened week higher, aided in part by quarter-end positioning dynamics and tentative signs of easing geopolitical tensions in the Middle East. Most sectors were positive, with communications, technology, and financials leading markets higher while energy was the sole decliner.

Securitized Products: The CLO market rallied this week amid stronger macro data. Bond prices are now higher than in early March, when both AI-related concerns and macro uncertainty weighed on sentiment. Amid volatility, AAA CLOs have remained stable, reinforcing the view that this tranche remains a core hold within the sector.