Where are all the jobs?!??

9/3-9/6 Headline: Mortgage Rates Push Lower as Labor Market Deteriorates?

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All 3 major labor market reports were worse than expected last week - good news for mortgage rates. Remember the Fed's dual mandate is to minimize inflation AND maximize employment. Nothing gets the Fed to act faster or? interest rates to drop faster than bad jobs data. While the Fed is said to be an impartial, nonpartisan agency, we are also in an election year!?

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The average rate on a 30-year fixed rate conventional loan DROPPED to 6.21% (a big decrease from the 6.37% reported last week).? Sign up for our weekly Friday rate texts to see our rates (a client recently told me our rates are "too good to be true" and that's the nicest thing I've heard in a long time)!

Job Openings Sink?

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Job openings fell to the lowest levels since February 2021. The Department of Labor's survey showed that available positions fell to 7.67M (vs 8.1M expected). That's a 500k difference! That number puts the ratio of job openings per available worker down to less than 1.1, about half where it was from its peak of more than 2 to 1 in early 2022 and less than where it was pre-pandemic.

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Hiring Drops for Private Companies

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Companies hired just 99k workers last month (vs 140k expected), according to payrolls processing firm ADP. Additionally outplacement firm Challenger, Gray & Christmas reported Thursday that this was the worst August for layoffs since 2009 and the slowest year for hiring since the firm started tracking the metric in 2005!

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US Employment Report Spooks the Stock Market

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We've now seen back-to-back bad employment reports. August's employment report showed that just 142k jobs were created (vs. 161,000 expected). Even worse, new revisions came out decreasing the amount of jobs created in June and July by? 86,000 (and those numbers were pretty bad before the revisions)!

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The unemployment rate dipped slightly to 4.2% (as expected), but the "real" unemployment rate, which adds back in discouraged workers and those holding part-time jobs for economic reasons edged up to 7.9%, its highest reading since October 2021. Stocks had déjà vu and dropped just like they did after the July jobs report but are looking to recover today.?

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Mortgage rates also fell after the report was released... but that's a good thing ??.?

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Fed Talk

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San Francisco Federal Reserve President Mary Daly on Wednesday said interest rates need to be cut but unclear by how much. She notes that she believes the labor market is still strong. "Wages are growing faster than inflation and workers are still finding jobs. Businesses are being "frugal" with hiring, they are not "dusting off their layoff manuals," according to Daly. I wonder if the reports released after her statements changed her opinion on the labor market at all.

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Federal Reserve Governor Christopher Waller said Friday that he is open to a bigger cut on 9/18 after receiving all the jobs data. “The balance of risks has shifted toward the employment side of our dual mandate,” Waller said, adding that "the current batch of data no longer requires patience, it requires action,”

RATE CUT WATCH:

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There's still a?100% chance of seeing a rate cut on September 18th! However, odds are tilting heavily towards just a 25bp cut.

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Barring a catastrophically bad CPI report on 9/11, I'm of the opinion that the first rate cut will be taking place on 9/18. The market is expect CPI to come in at 2.6% (vs 2.9% last month).? I think at this point, the Fed will opt for a 25 bps cut as well as they fear a larger cut may reignite inflation. You'll definitely want to follow us?on Instagram for immediate reactions to inflation news! Plus our memes have been VERY funny lately (but I'm biased).?

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September 18th will be a pivotal day for MILLIONS of potential homebuyers. If you are one off those individuals, PLEASE beat the rush by having all your ducks in a row. Let us help you! My team and I are even available weeknights and weekends to assist. Reach out with any questions you might have so we can get you preapproved and ready to put in an offer as soon as the timing is right for you.

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In other news:

• Trump Vs. Kamala Debate is?scheduled to air on Tuesday, 9/10 at? 8pm CT/9pm ET. The last presidential debate had a temporary negative effect on interest rates so you'll want to pay attention to how this one effects markets on 9/11, the same day as the CPI release!?
• Bank of Canada cut its interest rates last week and the European Central Bank is expected to do the same this week (all the cool kids are doing it).
• HousingWire is saying - with the drop in interest rates - we may have already seen the peak in housing inventory for 2024.

Key reporting dates this week:?

Mon, 9/9: Wholesale inventories, Consumer credit

Tues, 9/10: NFIB optimism index, Trump vs Kamala

Wed, 9/11: ,CPI, Core CPI

Thurs, 9/12: Initial jobless claims, PPI, Core PPI

Fri, 9/13: Import price index

Don't forget - the average rate we quote DOES NOT EQUAL your rate. Sign up for our weekly Friday rate texts to better understand where our rates are relative to the average (Note: You'll be pleasantly surprised!)

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Talk soon!

Eric

Eric Bernstein | Co-Founder & President | NMLS# 1486987?

o: 512-881-3266 | m: 512-701-1819??

e:?[email protected]?

222 West Ave, Austin, Texas, 78701

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