To be blunt: in our view the jobs data were plainly miserable and disappointing.

Like many of our readers, I listened to the debate on CNBC and read numerous analyses. We will set aside the perennial optimists who find positive outcomes in any data set. Simply put: a 10% unemployment rate and a 17.3% underemployment rate are two extremely serious numbers.

They help explain the market’s immediate reaction, which was a Treasury bond price rally and a drop in the 2-year note yield to an intraday low of 0.936%. The 2-year note yield under 1% is a very important figure for market watchers. It is a key market-based pricing of expectations for the Federal Reserve’s interest-rate policy. This reaction essentially suggests that the Fed will maintain the policy-setting Federal Funds interest rate range of 0.0% to 0.25% for at least the first half of 2010.

That has been Cumberland’s expectation for some time. The assumption of a very low US interest-rate policy continues to drive our investment decisions as we conduct stewardship over portfolios through these extraordinary times. Talk about an imminent exit strategy by the Fed is just talk. It is quite possible that the Fed will maintain the zero-bound rate for the entire year. Maybe, they will firm the rate to 0.25% instead of a range this summer. Our longer-term estimate is that we will not see the Fed Funds Rate above 1% until 2011 at the earliest.

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