Mortgage backed securities (MBS) prices are lower (rates higher) after release of March Employment figures as traders refocus on the record amount of government debt needed to be sold to end the recession.

The economy lost 663K workers in March bringing the total losses since December 2007 to near 5.1 million. The Unemployment rate climbed to 8.5%, the highest level in 25 years, threatening to keep spending subdued for months and delay any recovery. The job cuts have been spreading from manufactures to service providers and employers are also cutting back on hours. Average work week shrank to a record 33.2 hours in March. ISM non-Mfg index fell to 40.8, more than expected, pointing to a deepening contraction. New orders, employment and prices paid components all fell indicating slowing business conditions ahead.

On a positive note, no primary dealers submited bids to tap the Fed's Term Securities Lending Facility (TSLF)to help firms meet short-term funding needs indicating more optimism regarding ways to finance holdings of less liquid assets like MBS