The Bureau of Labor Statistics (BLS) released its July Jobs Report this morning, and it came in much weaker than expected. The economy lost 23,000 jobs, compared to expectations for an 80,000-job gain. In addition, payrolls for May and June were revised lower by a combined 103,000 jobs, reinforcing the view that the labor market has been slowing for several months.

In my opinion, this is exactly the type of data the Federal Reserve needs to acknowledge. The labor market is no longer showing the same level of strength it did a year ago.

The Fed’s dual mandate is to promote maximum employment and price stability. As inflation has moderated and the labor market has softened, the argument for maintaining, or even raising the federal funds rate becomes less compelling.

We also saw just how sensitive the bond market is to geopolitical headlines.

Mortgage rates had been improving over the past week, helped by renewed optimism surrounding a potential ceasefire agreement with Iran. Then, yesterday, reports surfaced that Iran and Oman were discussing changes to transit through the Strait of Hormuz, including the possibility of restricting U.S. and Israeli passage. Whether such restrictions could actually be implemented is highly uncertain, but the headline alone was enough to unsettle investors and temporarily push bond yields higher.

For borrowers waiting on the sidelines, today’s jobs report is encouraging. It doesn’t guarantee lower mortgage rates tomorrow, but it does strengthen the longer-term case that rates have room to move lower as the economy continues to cool.

Let’s get you pre-qualified http://www.YourApplicationOnline.com