Jobs Report Bolsters Market's Bullish View

Friday's jobs report is just the latest data showing this resilient economy has recovered faster than anyone expected. In response, the fixed-income market has begun to lay heavy odds on a fed funds rate hike by May -- a notion that economists scoff at, but that investors should seriously consider.

The unemployment rate dipped to 5.5% last month, from 5.6% in January. Economists had forecast it would rise to 5.8%. Payrolls increased by 66,000 against expectations they would stay flat. The good news on the jobs front comes on top of the recent jump in the February purchasing managers' indexes, the big upward revision to fourth-quarter gross domestic product and the strong January durable goods report.

Treasuries slipped on the report, as bond investors began to think the Fed will be raising rates sooner than expected. The yield on the two-year Treasury jumped to 3.50% from 3.42%, putting it 175 basis points above the fed funds target rate. That's the largest spread between the two-year and the funds rate in seven years. Stocks maintained a solid advance Friday as the good news rolled in. ...