Data Preview & Forecast
MUFG forecasts April 2026 nonfarm payroll (NFP) growth to be 45k, slightly below the median of 65k from Bloomberg contributors, and slightly higher than central breakeven estimate of ~30k.
The unemployment rate (U/R) is expected to tick up to 4.4% in April, still consistent with low continuing and initial claims. However, the contribution of job losses to the unemployment level was significantly negative in March, and this is expected to “normalize” back into positive territory in April (i.e., an increase in job losses).
The impact on the labor market from the shock to oil and gasoline prices is expected to be minimal in April. Economic shocks generally take time to feed into the broader labor market.
Market Thoughts
Base-case view: If our combination view of weaker headline and a slight uptick in the U/R occurs, US rates should catch a bid as lately the market is acting more in line with fundamentals – where when NFP headline surprises higher, rates sell-off and vice-versa. We also think this time the U/R will matter more too. However, the rate rally would be muted, around 3-5bps as markets keep staying in a range.
Upside risk: If there is a repeat of last month, a major beat of over 75k beyond expectations (putting the headline print north of 100k) and if the U/R remains unchanged, then the 2yr would make a run again to the 4% level, but we expect dip buyers to step in if so.
Downside risk: An especially weak NFP and higher U/R would likely remove Fed hike expectations and re-steepen the curve. The 2yr could break towards the bottom of the recent range of 3.80-3.95%.
Please see the link for the full write-up with charts and scenarios…