Investors' focus is turning to ``the amount of job cuts you're going to have from this fallout,'' said Sean Murphy, a Treasury trader and strategist in New York at RBC Capital Markets, the investment-banking arm of Canada's biggest bank.
Treasuries headed higher after SunTrust Banks Inc., the seventh-largest U.S. bank, said it expects to eliminate 2,400 jobs by the end of next year as part of a plan to cut costs. That may signal the credit crunch in the U.S. will cost jobs and may slow the economy.
Countrywide Financial Corp., the biggest U.S. mortgage lender, has started laying off workers who originate loans as it cuts costs as part of a plan to survive the credit crunch, the Wall Street Journal said, citing an internal e-mail.
Mish has been having a great deal of fun at Countrywide's expense. He pointed out in his latest post:
And anyone having no concerns about jobs or bankruptcy at Countrywide is either very foolish or simply is so well off that he/she does not need a job. One look at the Mortgage Lender Implode-O-Meter count now at sitting 128 should be enough to convince anyone.
But Countrywide's problem leads to a greater issue. According to the Bureau of Labor Statistics, the US economy has added 644,000 financial jobs since this expansion officially started in November 2001. Here's a graph:
There have been a ton of bad reports coming out of the mortgage markets since the end of last year, accelerating over the last few months. But according to the graph, financial services are still adding jobs. At some point that's going to reverse.