Market Wrap: Today's market action had everything to do with Jobs, or rather the lack of them. Our benchmark FNMA 5.5% mortgage bonds gained 65bp to close at $101.34 after a far worse than anticipated monthly Jobs Report provided further evidence the economy has slipped into a recession. The Labor Department reported a loss of 80,000 jobs in March, the greatest job loss in five years. The market was looking for a loss of 50,000 jobs. To rub salt in the wound, February's previously reported job loss of 63,000 was revised to a greater loss of 76,000 jobs. As a consequence, the Unemployment Rate spiked to 5.1% from February's level of 4.8%, and with the higher job loss revisions worse job loss levels may lie ahead of us. The sour jobs news prevented the stock market from mounting any type of meaningful rally, but investors were surprised at how well the stock market held up during today's session rather than undergoing a sharp sell-off. In fact, the major indexes managed to turn in a "mixed" performance with the Dow Jones Industrial Average slipping 16 points lower to close out the week at 12,609. The NASDAQ Composite Index managed to scratch out a 7 point gain to close at 2,370 while the broader S&P 500 Index picked up a point to close at 1,370

Market Wrap: The mortgage bond market spent most of the day fighting its way back from far lower levels while the stock market mostly fizzled instead of sizzled due to "mixed" corporate earnings reports and poor economic news. On the earnings front, IBM had a great report with a 26% jump in quarterly profits and a forecast of increased earnings for the rest of the year. This news was offset by poor results from Nokia, Pfizer, Sallie Mae, and Merrill Lynch. Disappointing economic news included Weekly Initial Jobless Claims rising by 17,000 to 372,000 vs. 375,000 expected while the four-week moving average moved to 376,000. These claims numbers are historically linked to recessionary levels. Also, the Philadelphia Fed Manufacturing Index showed its worst performance since the start of 2001 with a reading of -24.9 vs. -15.0 expected. Normally this is the type of poor economic news that would send bond prices much higher, but traders felt the news wasn't "bad enough" and they largely ignored it. Bonds also had to deal with comments made by noted inflation hawk Richard "Loose Lips" Fisher. The Dallas Fed President and voting FOMC member cut loose with a new warning "against inflating our way" out of the credit crisis and stated additional interest rate cuts "may just compound the problem." However, the bond market successfully contended with a supply issue today as the Fed auctioned $25 billion in 28-day credit through its Term Securities Lending Facility (TSLF). This Fed financing tool provides banks with an option to pledge their illiquid mortgage-backed securities as collateral in exchange for US Treasuries that can sold and used for new loan funding. The last TSLF auction of $50 billion weighed negatively on the bond market with a poor bid-to-cover ratio of 0.68 but today's was half the size and had a good bid-to-cover of 1.40 sending bonds higher. Our benchmark 5.5% FNMA coupon bond ended a volatile session with a remarkable 6bp gain to close at $99.81 after fighting back from an earlier intraday loss of 50bp. The major stock market indexes ended mostly flat but "mixed" with the Dow Jones Industrial Average gaining a measly point to close at 12,620 while the NASDAQ Composite Index eroded by 8 points to close at 2,341. The broader S&P 500 Index added a miniscule 0.85 of a point to close at 1,365.

Market Wrap: Our benchmark FNMA 5.5% mortgage bonds advanced 34bp to close at $100.69 following larger than expected weekly initial jobless claims. Jobless claims jumped by 38,000 to 407,000 reaching a two year high.  The more widely watched four-week moving average for initial jobless claims increased by 15,750 to 374,500, also a two year high reading. The consensus estimate was for 365,000 new claims. The data suggests a weakening trend in the labor market and may also signal a weak monthly Jobs Report for tomorrow. Bonds gave up some of their gains as the day wore on following a better than anticipated ISM Services Index for March. The Index measures activity in the service sector of the economy and although the reading came in below 50% at 49.6% indicating a slight economic contraction, analysts were expecting a lower level of 48.5% or worse. The news allowed the major stock indexes to pick up off of their lows while pushing bond prices off of their intraday high prices. The Dow Jones Industrial Average edged 20 points higher to close at 12,626; the NASDAQ Composite Index picked up a point to close at 2,363; and the broader S&P 500 Index also added a point to close at 1,369.

Market Wrap: The ADP Employment report scrambled the eggs of the bond market early this morning with a far higher than anticipated estimate of private sector job creation. The notoriously unreliable ADP report forecast 8,000 new jobs while the consensus estimate was for a loss of -45,000 jobs. After adding in a monthly average of 32,000 government-created jobs, the ADP report suggests Friday's official Jobs number will surprise to the upside with the creation of about +40,000 jobs for March. This is a far greater number than the current consensus estimate of a loss of -50,000 jobs. Bonds sold off on the news while stocks began trading higher with bonds at one point plunging well below key support at the 50-day MA and testing secondary support at the 100-day MA. Also providing market turmoil was a Congressional Joint Economic Committee hearing that included testimony from Fed Chairman Ben Bernanke, New York Fed President Timothy Geithner, SEC Chair Christopher Cox, JP Morgan Chase CEO James Dimon and Bear Stearns CEO Alan Schwartz. The topic of discussion was financial market turmoil with the present state of the housing market, credit crisis, and the outcome of the Fed engineered Bear Stearns bailout by JP Morgan included on the meeting agenda. Bernanke stated the economy may be headed into a brief recession during the first half of this year, but he was more optimistic about the economy over the second half of the year as the full effects of the Fed's interest rate cuts begin to stimulate economic growth. Bonds were hit with some additional selling pressure at this point and stocks were cruising along a little higher until the release of the Energy Department's Energy Information Administration (EIA) report of an unexpected decline in gasoline inventories due to higher demand. The EIA reported a 4.5 million barrel decline in gasoline inventories from last week and this was twice the inventory decline forecast. This news triggered a rally in oil prices to $104 per barrel and created a sharp spike in gasoline futures prices. This news did not sit well with the stock market as it suggests retail gas prices will increase to levels this summer that will create a far greater financial burden on consumers while negatively impacting corporate earnings. As stocks then retreated on this news, our benchmark FNMA 5.5% mortgage bonds staged a late session rally and bounced back from a -44bp deficit to reclaim the 50-day MA support level with a close at $100.38, down -12bp. Meanwhile, the major stock market indexes slipped with the Dow Jones Industrial Average closing 45 points lower at 12,608; the NASDAQ Composite Index dropping a point to close at 2,361; and the broader S&P 500 Index dipping just 2 points to close at 1,367.

Market Wrap: Other than being April Fool's Day, today is the first day of a new quarter and investors were willing to believe the worst is over for the credit crunch and the subprime related write-downs triggering it. The stock market took news of massive new write-downs by banking giants UBS and Deutsche Bank; news of a National City Bank plan to sell itself; and news of a 3 million convertible preferred share offering by Lehman Brothers as a signal the credit crisis may be coming to an end. A huge stock market rally ensued and this was further fueled by a better than forecast March ISM Manufacturing Index number. The ISM edged higher to 48.6% from the 48.3% level recorded in February. This was a surprise considering market expectations were for a slightly lower number with economists looking for a reading no higher than 48.2%. Although readings below 50 indicate economic contraction, the stock market took the improved results as a sign for a more mild than forecast recession. However, before the stock market gets too giddy with the idea bank write-downs may be drawing to a close, Goldman Sachs recently forecast Wall Street investment banks could eventually write down as much as $460 billion in sub-prime related losses. This may mean the investment banks are only half-way done with their write-down process. Meanwhile, our benchmark FNMA 5.5% mortgage bonds were under water for the entire session, but closed above their worst levels of the day at $100.50, down -41bp. The stock market "hit a trifecta" with all three major indices recording impressive gains. The Dow Jones Industrial Average ran 393 points higher to close at 12,656; the NASDAQ Composite Index scored an 83 point gain to close at 2,362; and the broader S&P 500 Index surged 47 points to close at 1,370.