What 6.3% Means for The Fed's Dots

        13:11 EDT - However you slice today's payrolls report, April's 0.3 point decline in the jobless rate means the US is getting closer to its natural unemployment rate. To the Fed, that means the unemployment gap (or labor market slack) is narrowing. Deutsche Bank's Torsten Slok uses the Fed's "reaction function" and finds that, assuming at least 0.2 of the 0.3 point decline holds in coming months, the Fed's policy-rate forecasts will have to rise. He says the median "dot" go up 25 bps to 1.25% for 2015 and median dot for 2016 go up 50 bps to 2.75%. That would put a lot of pressure on short-end Treasurys. (cynthia.lin@wsj.com; @cynthialin_dj)
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        May 02, 2014 13:11 ET (17:11 GMT)