ADP released weaker-than-expected jobs data today, and for once, “bad news” was good news for bonds. Bonds caught a bid, which helped nudge mortgage rates slightly lower. No victory parade, but we’ll take the win.

Digging into the details (because the headline never tells the full story):

• Small businesses: created exactly zero jobs. Not negative… just aggressively neutral.
• Large businesses: shed about 18,000 jobs, which lines up with the layoffs we’ve been hearing about from companies like Amazon, UPS, and others.
• Medium-sized businesses: the overachievers of the group, adding roughly 41,000 jobs and doing all the heavy lifting.

So while the job market isn’t falling off a cliff, it’s clearly losing momentum. And that’s important.

A cooling economy and a softer labor market are exactly the signals the Fed watches for when deciding whether it’s time to lower rates, especially if inflation continues trending down as expected.

Bottom line:
Strong jobs push rates up.
Weak jobs pull rates down.
Today leaned more toward “rate-friendly slowdown” than “red-hot economy.”

And once again, what looks like bad news at first glance ends up being pretty decent news if you’re watching mortgage rates.

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