By Larry Baer, Market Alert

Commentary:    The biggest story of the day is not the mortgage market friendly data contained in this morning's February Nonfarm Payroll figures -- but rather the announcement from the Federal Reserve that they plan to pour tons more money into the short-term credit markets in an effort to ease persistent liquidity strains at financial institutions.

The Fed announced a boost in funding for its term auctions to $100 billion and said it would start a series of term repurchase transactions.  The "so what" factor here is that these two measures have likely put an end to the forced liquidation of mortgage-backed securities by a number of financial institutions.  It was the desperate scramble for liquidity by these institutions that was the primary culprit behind skyrocketing mortgage interest rates over the past four days.

The news from the Labor Department showing that employers cut 63,000 jobs in February had most of its "thunder" stolen by the earlier Fed action.  Mortgage investors were relieved to find that average hourly earnings posted a non-inflationary gain of 0.3%.  Revisions that showed January's job loss was actually 22,000 instead of the 17,000 originally reported and 50% reduction in the original December headline payroll number to a gain of 41,000 instead of the previously reported 82,000 were welcomed by investors as well.  The back-to-back January and February job losses were the first consecutive monthly declines since May and June of 2003.

Looking ahead to next week investors will closely eye Thursday's February Retail Sales numbers and Friday's February Consumer Price Index.  Both reports are expected to be mortgage market friendly - confirming the majority of analysts' assessment that the economy is now in the early stages of a recession.  It is also at least worth noting that Uncle Sam will enter the credit markets Wednesday afternoon looking to borrow $8 billion in the form of 10-year notes. The probabilities are high that the 10-year note auction will have little, if any noticeable impact on the trend trajectory of mortgage interest rates. 

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