Like many world markets, the major US equity indices opened deep in the red after bond markets around the globe got smoked overnight. A tepid 10-year auction in Japan caused its benchmark yield to jump 5 basis points to 0.443%. The heavy selling then made its way to Germany, where the 10-year bond yield climbed 9 basis points to 0.701% for the highest level in the last five months. Now, the weakness has come full circle to the US Treasury, where the 10-year yield has popped 5 basis points to a five-month high of 2.34%. The rapid pace of the selloff has surprised many investors because over the past few weeks, there has been little fundamental news to support such an exodus away from the bond market. At the moment though, traders are saying low liquidity is the culprit behind the massive selloff. We will remain vigilant on the bond market for now.

In the meantime, there were two noteworthy domestic economic releases this morning; the latter gave a pop to the equity markets mid-morning. Firstly, despite recent gloom-and-doom data in the consumer space, there remains some serious optimism among small entrepreneurs. The National Federation of Independent Business (NFIB) noted that its small business optimism index for April increased by a very solid 1.7 points to a higher-than-expected reading of 96.9, which was well above the 96.5 at high-end of the consensus range. During the month, 9 out of 10 components improved in April, which is very positive since all 10 components fell in March. Additionally, the index was primarily led higher by earnings trends and job readings. At the moment, inventories are considered too low and restocking is planned which is a big positive for hiring and output. This is contrary to much of the national data on inventories, which are demonstrably still high at the wholesale and retail levels. Unwanted overhang slows economic growth, but at least on a small business level, inventories appear to be under control. The overall outlook (noted by the black line in the chart below) also showed a slight uptick in the month and is a positive sign for earnings going into the summer months. All in all, this report is quite positive, pointing to some acceleration in the small business sector for the spring season and Q2-2015.

Additionally, reflecting the softness in the labor market conditions index, the Labor Department’s Job Openings and Labor Turnover Survey (or JOLTS report) noted that job openings declined by 2.9% to 4.994 million in March versus a revised 5.144 million in February and well below the consensus estimate of 5.158 million. However, despite the falloff in jobs openings for the month of March, workers still appear to be confident in the labor market judging by their willingness to quit their current job. The quits rate increased by 1 tenth for the month, to 2.0% or 2.783 million quits versus 2.720 million in February. The overall hiring rate for the month held steady at 3.6%. The number of hires and openings are converging however, showing that just about every new job listing is easily filled. April’s employment report for April was much better than March, but was still relatively soft, and is reflected in this JOLTS report.