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Capital markets were mixed in April. Emerging market stocks led all positive gains due to higher commodities prices and a pushback in expectations for a U.S. interest rate increase. Commodities surged, driven mostly by climbing oil prices. International stocks were up with the euro gaining 4 percent against the U.S. dollar. Domestic bonds edged lower with the 10-Year Treasury yield ending 11 basis points higher at 2.03 percent.

The Federal Open Market Committee (FOMC) maintained its federal funds target rate range after meeting in April, and kept the guidance language very similar to the March statement. The FOMC reaffirmed the need for further improvement in the labor market and further confidence that inflation will move back to its 2 percent longer-run target over the medium term.

Taking a deeper look at the labor market, the most commonly reported unemployment rate, known as the U-3, stood at only 5.5 percent in March. However, the committee likely focused on the U-6 rate, which is much higher at 10.9 percent (source: Bureau of Labor Statistics). The U-6 rate is broader, including part-timers who prefer full-time employment and those who have stopped looking. Inflation, as measured by personal consumption expenditures, has continued to run below the 2 percent target.

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