Vital Statistics:
Stocks are lower as markets continue to react to tariffs. Bonds and MBS have had a furious rally since the announcement, with the 10 year trading with a 3 handle.
As a general rule mortgage rates will lag big moves in the 10 year, so if rates find a level here, we probably will see more downward pressure on mortgage rates. For all of the consternation in the press and chattering classes about the inflationary impact of tariffs, bonds are not confirming that opinion.
Announced job cuts surged in March, according to the Challenger and Gray Job Cut Report. Companies announced 172k job cuts which was the highest monthly total since July 2020. “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 in job cuts with 62k. There are another 200k on hold due to some judge but he will probably get overturned, so there are definitely more cuts in the hopper. Not only will government jobs get cut, the Beltway Bandit Consultancy Service will also take some hits.
The services economy expanded in March, according to the ISM Services Report. “March saw drops in the readings of three (New Orders, Employment and Supplier Deliveries) of the four subindexes that directly factor into the Services PMI®. Only Business Activity saw an increase over February’s reading. Employment was the only one of these subindexes to drop into contraction territory after three straight months with all four in expansion. There has been a significant increase this month in the number of respondents reporting cost increases due to tariff activity. Despite an increase in comments on tariff impacts and continuing concerns over potential tariffs and declining governmental spending, there was a close balance in near-term sentiment, between panelists with good outlooks and those seeing or expecting declines.”
Prices declined, which is good news for falling inflation.
