Mortgage News

The July JOLTS Jobs report show job openings fell 176,000 to 7.181M $219,000 less than estimates.

Hiring rate remains low at 3.3%

Quits rate is also low at 2.0%.

FED Gov Christopher Waller said Fed should be cutting next meeting – end of September.

My take:

Labor market is showing its hand and when it does it goes quick. The Feds need to stay ahead of the pain and swallow the rate cut pill now.

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This one caught me by surprise, the lower court’s ruling against using the International Emergency Economic Powers Act (IEEPA) as authority to impose tariffs could have major implications.

Think of it this way: it’s like receiving a generous gift from family, only to spend it on a new car and outfit. Then, two weeks later, they come back and say, “Oops, our mistake. We need that money back.”

The U.S. has collected billions in tariffs, though technically paid by U.S. companies, that may need to be refunded. The big question: where does the government get the money to pay it back? Likely from the bond market.

With that said the Bond market got scared and is trading lower causing rates to move up, slightly.

In other news: Jobs, jobs, jobs! We’ve got JOLTS, ADP, and the always-dramatic BLS report on deck. Could be a real bond mover, in the good way.

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Waller is looking past the headlines, spotting May–June job revisions (with more likely ahead) and pushing for a 50bp cut in rates. Oh, and by the way… he’s also the frontrunner for the next Fed Chair.

PCE rose 0.2% in July, year-over-year held steady at 2.6%, and Core ticked up to 2.9%, all exactly as expected.

Catch my drift? Everything came in as expected… and the bond market’s reaction was, well, no reaction.

With rates trending lower, I know you have options when it comes to choosing a lender, whether you’re refinancing or purchasing. What sets us apart is not only our expertise in lending, but also our understanding of the market and the timing of when to lock or float a rate.

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The Fed’s favorite bedtime story, Personal Consumption Expenditures (PCE), comes out tomorrow morning. Expectations are for a 0.3% rise, with inflation running at 2.9% annually.

Think of it as the trailer before the big blockbuster: next month’s report will be the real show, for better or worse.

Drama persists at the Fed with Powell pressured to leave and allegations of maleficence. True or not it creates uncertainty which no one likes.

The Initial Jobless Claims report paints the picture of a stable labor market on the surface. But a closer look tells a different story. While about 200,000 people are receiving Continuing Claims, this figure overlooks the 900,000 who fell off the rolls, individuals no longer receiving benefits and still struggling to find employment.

This is a good reminder that headlines and soundbites rarely capture the full picture. To understand the labor market, you have to look beyond the surface.

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NVIDIA now represents 7.68% of the S&P 500, the largest single weighting in the index. Expectations for their earnings are set extremely high.

If they deliver a strong beat, equity markets could rally further, with some capital flowing out of the bond market.

Conversely, if NVIDIA falls short of expectations, equities could pull back, prompting investors to rotate into bonds, helping drive interest rates lower.

NY Fed President John Williams says we are too restrictive by 0.875 indicating he is up for 3 rate cuts this year.

Personal Consumption Expenditures – PCE the Feds preferred measure if inflation will be released Friday.

Between NVIDIA’s earnings and the upcoming PCE report, the bond market could move in either direction. If you’re currently floating but like the rate you see, it may be wise to lock now.

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In every gathering there’s that moment when the cake is cut and everyone glances around. A pause hangs in the air. Do you take the first piece? Do you wait politely?

Eventually someone makes the move, and suddenly it’s no longer awkward, it’s just cake being eaten.

Now think about the Fed and rate cuts. They’re standing over the cake. Everyone sees it, everyone wants a slice, markets, borrowers, politicians. But hesitation is real.

Once you cut that first piece, expectations change. Cut too early, and you look greedy, reckless. Wait too long, and the cake gets cold, or worse, someone else defines the moment for you.

This is the “Monster in the Math”, the uncertainty baked into every economic model. Growth slowing, inflation cooling, jobs weakening… none of it ever adds up neatly. The Fed knows once they take that first slice, it sets the pace for everything that follows.

The Feds are cutting the cake. Get ready for the ride to start.

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Consumer spending drives 68% of GDP, which means the economy lives and dies by how confident people feel about their wallets. The catch is, it’s not just about the money in their accounts, it’s the sense of wealth.

When people feel richer, they splurge. When they feel squeezed, they cut back fast. That psychology is the Fed’s biggest blind spot: they track the numbers after the fact, while the spending mood can change overnight.

Existing home sales rose 2% in July to a 4.01M unit annualized pace, well above expectations of just 0.5%. Some genuinely good news in housing.

My thoughts:

Powell spoke today, and appeared to give the green light on cuts. He noted the downside risk of employment. We are all collectively crossing our fingers that it will have a positive impact on mortgage rates.

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Today starts the three day Jackson Hole Meeting where central bankers from around the world speak. Powell talks Friday at 10am ET.

Later today, we’ll see a 20-year bond auction, a routine event, but one worth watching. The key factor is demand: strong demand pushes bond yields lower, and mortgage rates typically follow suit.

Q3 GDP outlook is all over the map, with estimates ranging from -0.3% to 2.3%. The wild card? Trade and tariffs, and how they ultimately shake out. A weaker GDP print would put added pressure on the Fed to cut rates.

One of the biggest criticisms of Powell is his obsession with being “data dependent.” The problem is that economic data, by definition, is backward-looking. Relying on it to make forward policy decisions is like trying to drive while staring only through the rear-view mirror, you see where you’ve been, but not where you’re going. By the time the Fed reacts, the road ahead has often already changed.

My take:

The job market right now is essentially treading water, neither adding nor subtracting in any meaningful way. That’s a sharp contrast from just a few years ago, when employers were competing aggressively for new hires. The real concern going forward is whether we start to see the employment pool shrink, which would signal a much deeper shift.

Its time for the FED to turn around and look through the windshield.

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Even though multi-family housing fell 3%, single-family permits were on the rise. Anecdotally, it makes sense, you’ve probably noticed the surge of apartment complexes and other multi-family projects that have gone up over the past five years.

Home completions rose 6%, with most of the gains once again coming from single-family homes.

The market is sitting on enormous pent-up demand, with buyers and sellers alike sidelined by higher interest rates. The dam is going to break and we believe it’s going to be sooner rather than later.

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It’s a big earnings week ahead and our first real look at inflation. Up to now, producers and retailers have been quietly swallowing the costs of tariffs, but that’s not a diet they can stay on forever.

The increases we’re seeing are real, though still less dramatic than what the media (and admittedly, myself) have been bracing for.

10y and 30y bonds are holding steady, keeping rates in place for now. However, upcoming earnings reports could inject real volatility into the market. We’re leaning toward a lock position but holding off on pulling the trigger just yet.

We anticipate a 25bp rate drop from the FEDs in September but will know at Fridays Jackson Hole Symposium with Fed Chair Powell speaking.

Have a fantastic week, lets get you pre-approved and ready to role.

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