Ouch. MBS down 37 bps this morning.
It looks like it was wise for the bond market to play it safe by winding down the rally momentum yesterday because this jobs report doesn’t line up with the weakness seen in the balance of the week’s econ data. Bonds have sold off accordingly, but fairly modestly in the bigger picture. US payroll growth moderated in March while wages advanced and the unemployment rate retreated, sending mixed signals to the Federal Reserve as it debates how much higher interest rates will go.
Nonfarm Payrolls: 236k vs 239k f’cast [326k prev]. Jan revised down 17k
Unemployment Rate: 3.5 vs 3.6 f’cast [3.6 prev]
Earnings; 0.3 vs 0.3 f’cast [0.2 prev]
The Atlanta Fed’s GDP Now Index has declined sharply over the past few weeks, with the index now seeing 1.5% growth in Q1. The index was at 3.5% just a few weeks ago. It looks like the ISM reports, along with weaker consumption numbers pulled down the index, not the banking issues.
Overall, the report was more or less in line with expectations. The labor force participation rate and the employment-population ratio rose, which shows that more workers are re-entering the labor market. Average hours work is amongst the lowest in quite a while. So employers seems to be cutting hours – not jobs.
The market had been pricing around 14 basis points of May tightening in the lead up to the jobs report, suggesting a little over a one-in-two chance of a hike.
Shrinking wholesale lender Homepoint is closing its mortgage origination business and will sell its origination-focused assets to competitor The Loan Store, the company announced on Friday.
Turning from the primary markets to the secondary markets, investors continue to sit on the sidelines of the $11 trillion mortgage-backed securities market as they await BlackRock helping the Federal Deposit Insurance Corp. liquidate the roughly $100 billion MBS portfolio it acquired from Silicon Valley Bank and Signature Bank. Those banks will probably be mired down in lawsuits for years.