Market wants to give us hope today. Up 52 bps early.

Nonfarm Payrolls = 311 vs 225 f’cast, [504 prev]

Wages = 0.2 vs 0.3 f’cast, [0.3 prev]  up 4.6% YoY

Unemployment Rate = 3.6 vs 3.4 f’cast, [3.4 prev]

Participation rate +0.1

Surprisingly enough, the 311k headline isn’t enough to spook the bond market this morning. Lower wages and a BIG uptick in unemployment are helping to offset. The first move was actually toward stronger levels, but it has been reversed to some extent. We expect more volatility as traders trade this out. Fortunately, we’re starting out with a big lead this morning thanks to a big overnight rally on Silicon Valley Bank news.

SVB stock was halted and they’ve announced they are putting themselves up for sale, having $91bln in HTM securities @ 1.66% yield is apparently a poor strategy when funding costs are flirting with 5%. Over the past few sessions they’ve unloaded a significant amount of securities with money managers scooping up a good portion of the fire sale.   An inverted yield curve is a major headache for banks, who borrow short and lend long. If you want to know why your local bank is paying depositors well below the Fed Funds rate, well, there you go. If a bank is only earning 3.8% on Treasuries, it isn’t going to pay 4.25% on a savings account.

The Federal Trade Commission has voted to officially block the merger of Black Knight and ICE. The FTC did mention the proposed remedy of selling Empower to Constellation Software.

The most notable development on jobs day has stunningly turned out to be the trading that came before the jobs report in the overnight session.  Bonds embarked on a fairly big rally, ostensibly due to Silicon Valley Bank news.  10yr yields were roughly 10 bps lower before NFP came in at 311k vs 205k f’cast.  Anyone could be forgiven for think such a number meant trouble for bonds, but bonds paradoxically rallied (with an eye on higher unemployment and lower wages).

Despite significantly reducing expenses, exiting the wholesale channel, and cutting thousands of jobs, loanDepot Inc. on Wednesday reported losses for both the fourth quarter of 2022 and the full year. Fourth quarter 2022 summary: Quarterly revenue decrease of $104.5 million driven primarily by lower market activity due to increased interest rates and seasonal slowdown in purchase volume. Reduced total expenses by $91.4 million, or 21 percent, from third quarter primarily driven by lower staffing levels, marketing spend, and Vision 2025 related costs. Net loss increased 15 percent to $157.8 million in fourth quarter from third quarter driven by lower revenues partially offset by aggressive expense reductions. Company exited the year with cash balance of $864.0 million.

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