Morning Report: YTD job cuts are the highest since 2009

Vital Statistics:

S&P futures3,9960.75
Oil (WTI)77.00 0.34
10 year government bond yield 3.98%
30 year fixed rate mortgage 6.84%

Stocks are flattish this morning on no real news. Bonds and MBS are flat.

Jerome Powell wrapped up a second day of testimony yesterday, and his prepared remarks were more or less the same as what he said on Tuesday in front of the Senate. After the markets took his remarks as a signal the Fed was planning to hike by 50 basis points in March, he added the comment that “I stress that no decision has been made on this” when referring to the Fed’s preparedness to increase the pace of rate hikes. Of course we will get the jobs report tomorrow, and the CPI next Tuesday which will determine what the Fed does in two weeks.

The Fed Funds futures see a 75% chance of a 50 basis point hike, although the 2 year yield has fallen this morning on some labor data that shows a potential softening in the data.

US employers announced 77,770 job cuts in February, according to outplacement firm Challenger, Gray and Christmas. This is down 24% from January, but multiples of last year’s number. Technology is the leader in job cuts. The YTD number is the highest since 2009. “Certainly, employers are paying attention to rate increase plans from the Fed. Many have been planning for a downturn for months, cutting costs elsewhere. If things continue to cool, layoffs are typically the last piece in company cost-cutting strategies,” said Andrew Challenger, Senior Vice President of Challenger, Gray & Christmas, Inc. “Right now, the overwhelming bulk of cuts are occurring in Technology. Retail and Financial are also cutting right now, as consumer spending matches economic conditions. In February, job cuts occurred in all 30 industries Challenger tracks,” he added.

Challenger and Gray basically compile a list of press releases and use that to come up with their numbers. So if Meta announces a bunch of job cuts, that gets counted, but if a small firm does a layoff without a press release that doesn’t factor into the numbers. So there is a big firm bias here.

Separately, Initial Jobless Claims rose to 211,000 last week.

Agile Trading, a fintech which facilitates MBS and TBA trading, just executed the first fully automated assignment of trade transaction. Agile’s platform helps mortgage lenders get better execution on hedges and introduces broker-dealers to a deep pool of TBA and MBS liquidity.

Loan Depot announced fourth quarter earnings yesterday. Since the company exited wholesale, the declines are rather dramatic. Funded volume in the fourth quarter came in at just under $7 billion, a decline of 43% compared to the third quarter and 80% on a year-over-year basis. Loan Depot is focusing on reducing expenses and targeting the first time homebuyer and diverse communities.

“Vision 2025 focuses on creating long-term shareholder value by creating an innovative, purpose-driven, and durable mortgage origination footprint focused on first-time homebuyers and serving diverse communities. We believe that a laser focus around putting first-time buyers into homes positions loanDepot to be a customer’s trusted resource when making key homeownership and other financial decisions. We also continued to centralize our operational functions and unified the leadership of our origination channels to sharpen our focus and accelerate the implementation of Vision 2025.

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