(Reuters) - Wells Fargo & Co (WFC.N) plans to pay $590 million to settle a class action lawsuit regarding Wachovia preferred securities and debt, the company said on Friday. The 2009 class action case was filed in a federal court in New York City on behalf of buyers of certain Wachovia bonds and preferred securities. Those buyers alleged that Wachovia misrepresented its residential-mortgage holdings in offering documents during the lead-up to the financial crisis. The settlement is not expected to hurt Wells Fargo's financial position, it said in its quarterly filing with the U.S. Securities and Exchange Commission. Darren Robbins, a lawyer for the plaintiffs, said that auditor KPMG LLP, another defendant in the case, agreed to pay $37 million to settle the case, bringing the total recovery for plaintiffs to $627 million. Robbins said it would be the largest recovery in a case stemming from the credit crisis. In February, a federal judge in Los Angeles approved a $601.5 million settlement of a class action lawsuit against Countrywide Financial Corp over allegations it misled investors about its financial condition and lending practices. The settlements are subject to court approval. The case is In re: Wachovia Preferred Securities and Bond/Notes Litigation, U.S. District Court, Southern District of New York, No. 09-06351. (Reporting by Andrew Longstreth; Editing by Derek Caney)

It would be hard for us to find another instance of MBS prices moving in a more volatile fashion than this morning. In less than an hour, prices moved up 14 ticks to 2 day highs and then down 23 ticks to 2 day lows, and with plenty of smaller-scale choppiness in between. The only good thing about this morning's volatility is that the widest moves came before most lenders released rates (we say "most" but we can't confirm any were out before 9:25 when MBS hit their lows). Fannie 4.0's are back up to 103-00 from those earlier lows. Stocks appear to be stalling and bouncing lower after failing to break 1220. Bonds like it. 10's are down to 2.462 now. Keep in mind that quoted levels in these updates continue to be moving targets. Rate sheets could be significantly delayed this morning. Reprice implications are limited to non-existent until we have rate sheets to consider.

(Reuters) - U.S. job growth accelerated more than expected in July as private employers stepped up hiring, a development that could ease fears the economy was sliding into a fresh recession. U.S. payrolls increased 117,000, the Labor Department said on Friday, above market expectations for an 85,000 gain. The unemployment rate dipped to 9.1 percent from 9.2 percent in June, but this was mostly the result of people leaving the labor force. The payrolls count for May and June was revised to show 56,000 more jobs added than previously reported The report was the first encouraging piece of economic data in some time. Fears that U.S. economy might be sliding back into recession, coupled with Europe's inability to tame its spreading debt crisis have roiled global financial markets. Economists see the odds of a recession as high as 40 percent. U.S. stocks on Thursday suffered their worst sell-off in two years. Top policymakers at the Federal Reserve will sift through the report when they meet on Tuesday but are not expected to announce any new measures to support the sputtering recovery. The U.S. central bank has cut interest rates to zero and spent $2.3 trillion on bonds. Policymakers have said they want to see how the economy fares before taking any further action. U.S. growth stalled in the first half of 2011, fanning fears of a new downturn. Gross domestic product grew at a 1.3 percent annual pace in the second quarter after a scant 0.4 percent rise in the first three months of the year.

After the release of the Employment Situation Report, the initial reaction in the bond markets was fairly scary. For a few brief moments, Fannie 4.0's traded near yesterday's lows. 10yr notes cracked 2.50 support and got as high as 2.528 before correcting back toward previous levels. 10's coasted into the report between 2.45 and 2.47 and are currently back down to 2.45. MBS are nearly back at yesterday's highs, currently 103-15, 2 ticks worse on the day. But we'd urge you not to pay too much attention to the actual levels expressed in this alert. They'll change. Often. The bottom line is that the 100k+ NFP print didn't kill us. Now we'll see if it's true that such things make us stronger.