UMBS opened up 19 bps.

ADP Employment = 140k vs 150k f’cast.   [107k prev]

Wage gains for job changers accelerated from 7.2% to 7.6%. Overall wage inflation was 5.1%

Leisure / hospitality added 41,000 jobs in February, followed by construction. The Street was looking for 150,000 jobs, so this was a bit lower than expected. The Street is looking for 190,000 jobs in Friday’s jobs report.

Sometimes it leaves a mark.  Sometimes it doesn’t.  Today’s ADP employment data is passing without much of a trace.  If one were to make a case for a reaction, it would be modestly positive, but also hard to separate from early bond buying (volume and gains showed up well before 8:15am).

Jerome Powell heads to the Hill today for his semiannual Humphrey-Hawkins testimony. His prepared remarks are posted.  Punch line: Rate cuts are coming, but not imminent

Flagstar parent NYCB got roughed up yesterday after Moody’s cut its credit rating below investment grade. Mortgage servicers who have their escrow accounts at Flagstar should be checking with Fannie / Freddie / Ginnie on whether they have to move these accounts to a different bank.

It was an interesting day for the bond market.  Yields dropped to the lowest levels in more than 3 weeks amid several apparently valid motivations.  But upon closer inspection, most of the improvement happened far enough away from those motivations to give them much credit.  On a day with JOLTS (job openings data) and a Powell testimony, the most obvious market mover was a series of headlines and trading halts surrounding NYCB, although those ultimately canceled each other out.  We’re left with modest but important improvement ahead of Thursday’s ECB announcement and Friday’s jobs report.

UMBS ended the day up 27 bps at 100.88

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