The 10-year Mortgage Bond is holding below 4%. This is a positive sign for Mortgage rates moving forward.

Fed Governor Michelle Bowman seems unaware of the shift in unemployment, which has risen from 3.4% in April 2023 to 4.3% today. To put this into context, every time unemployment has increased by that much since 1948, a recession has followed.

“the unemployment rate, while higher, is still historically low at 4.3%” – Michelle Bowman – voting member

Another aspect of the unemployment rate is how it’s collected and the participation level. The Business Survey, which provides the headline jobs figure, has seen a significant decline in participation, dropping from the usual 60% to 43%. Meanwhile, the Household Survey, which determines the unemployment rate, has also declined but still remains at 70%.

She goes on to talk about PCE and Core PCE still being above the target 2.0%.

This week, we’ll kick off with inflation data. The Producer Price Index (PPI), which measures wholesale inflation, is expected to rise by just 0.1% in July.

The year-over-year headline figure is projected to decrease from 2.6% to 2.3%. This is likely to be bond-friendly, indicating rate-friendly news.

My point is, when the wind is blowing, don’t just watch the trees swaying back and forth—look closer to see what’s actually hitting the trees.