The MBS were up by 3 basis points in the morning, while bonds remained unchanged during the domestic session. The ECB’s announcement had almost no impact on the bond market, and the only noticeable impact was a slight increase in yields following the Labor Cost data. Fed Chair Jerome Powell’s remarks about the unlikelihood of rate cuts and the persistent inflation issue were met with market anticipation of rate cuts as early as July. Western Alliance Bank has hired advisors to explore options for sale, which had little effect on the already strong bond market. Nonfarm productivity decreased by 2.7%, and unit labor costs rose by 6.3%, which is unfavorable news for the Fed. The regional banks, including PacWest, First Horizon, Western Alliance, and Zions, have experienced significant declines in the stock market. The uncertainty surrounding the banking sector is a leading cause of the bond market trading near multi-month lows. At the end of the day, MBS was up by 14 bps, stocks were down by around 30 points, and the 10 yr was up by just 2 bps. The market expects a recession, and the Fed may be forced to cut rates to address it.