Job cuts soar – The Daily Tearsheet

Vital Statistics:

Stocks are lower as markets digest some shock waves in the bond market. Bonds and MBS are flat.

US Treasuries reversed their push towards lower rates yesterday after Germany decided to increase defense spending without raising taxes or cutting other spending. The German Bund yield tacked on 30 basis points in yield (a gargantuan move for a sovereign bond) while pulled rates higher across the board.

We await the decision from the European Central Bank this morning, where they are expected to cut by 25 basis points. Since global sovereign bonds generally correlate, the US Treasury was impacted by this move as well.

Home prices fell 0.2% on a quarterly basis and rose 4.7% on an annual basis, according to the Clear Capital Home Data Index. For the most part, prices are still increasing on an annual basis, although MSAs like Tampa did see a slight decline.

The services economy expanded in February, according to the ISM Services Report. Despite all the fears about the economy weakening, both the ISM Manufacturing Report and the ISM Services report remained in expansion territory.

Prices did increase, and uncertainty is weighing on the sector, especially when it comes to tariffs. “February was the third month in a row with all four subindexes that directly factor into the Services PMI^® — Business Activity, New Orders, Employment and Supplier Deliveries — in expansion territory, the first time this has happened since May 2022. Slightly slower growth in the Business Activity Index was more than offset by growth in the other three subindexes. Anxiety continues; however, over the potential impact of tariffs. Some respondents indicated that federal spending cuts are having negative impacts on their business forecasts.”

Announced job cuts soared last month to 172,017 which was the highest monthly total since 2009. “Private companies announced plans to shed thousands of jobs last month, particularly in Retail and Technology. With the impact of the Department of Government Efficiency [DOGE] actions, as well as canceled Government contracts, fear of trade wars, and bankruptcies, job cuts soared in February,“ said Andrew Challenger, Senior Vice President and workplace expert for Challenger, Gray & Christmas.”

Government led the charge, with 62,242, followed by retail at 38,956. DOGE impact was cited as the biggest reason for the cuts.

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