After an Anemic Jobs report on Friday, Mortgage Bonds are in Rally Mode! That rally continues today. We are seeing the 10-year bond approaching 4%.
So, what happened? We are witnessing the continuing weakening in the job market. The August reading was expected at 75,000 jobs created and it came in at 22,000. The previous 2 months were revised lower. We had a negative -13,000 jobs in June. June’s revision was the first monthly loss in 54 months of positive job creation. In addition to Friday’s jobs report, we had a couple of employment reports that came out earlier in the week that showed the weaking job market.
Now the market is pricing in a .25% cut in September at 100%, an additional cut at the October meeting of .25% is 75%. There is a 70% chance of another cut of .25% in December. Crazy! Considering we had Maybe 1 cut on the table this year at the beginning of the week.
It’s still a cautionary tale.
We no longer live in a world where economic data drives the bus. So, what is given can quickly and without warning be taken away.
- Let’s not forget that inflation still exists. Wednesday and Thursday we have Inflation reports for August. On the consumer and producer side.
- If something happens and we don’t get a cut, Rates we move up at the speed of light, we won’t know what hit us because we have already priced a cut into today’s rates
- Steve Miran’s Senate Confirmation to be a VOTING Fed Governor should be approved. He is expected to vote for rate cuts in the upcoming meetings
- Courts deciding if Tariff’s are legal and if they’re not we will probably need to return the money collected
- Political uncertainty (nice way to put it)is still the biggest risk to the market
My advice is as Beyonce says “If you like it, then you should put a rate lock on it” Please don’t try an wait for a bottom.
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