Monday Mortgage Minute – Jobs data conflict and Jerome Powell speaks this week!


Well, the first week of the new year surely didn’t disappoint! The economic data we were waiting on came out mostly better than expected which initially sent mortgage rates up but they then eased to end the week.

The big deal of last week was the FOMC meeting minutes, which actually didn’t reveal anything new or earth shattering, so what could have been a rocky patch in the market was thankfully met with “Meh…ok”.

The surprising and possibly troublesome part of last week would actually be Friday’s jobs data that came out better than expected. With the Fed’s recent comments that they need to see a softening labor market in order to know that they are winning the fight against inflation, the last thing they want to see is more jobs being created and unemployment going down at the same time. Which BOTH happened. That might sound counterintuitive but in order to achieve their objective they have to continue forcing demand destruction, meaning less dollars chasing less goods at their current prices…More jobs and less unemployment is the opposite of that and translated as consumers ability to keep this spending up for even longer.

Last thought on this is actually a couple of headlines that crossed the screen this week regarding mass layoffs coming. Most notably Amazon announced job cuts of 18,000 (Article Link) and Salesforce announced job cuts of 10%, which is roughly 8,000 jobs (Article Link). So just those 2 companies make up 24,000 job cuts. And if this is any indication of what we can expect from companies that are smaller on the food chain, then all this aforementioned positive labor data could just be a blip on the radar. And only time will tell.


With that let’s get on to this week’s market outlook!

The economic calendar has 3 big things coming up this week.


First – Jerome Powell will speak on Tuesday January 10th, this is not expected to create any disturbances on the heels of a mild FOMC meeting minutes release last week; however, what most people ARE listening for are any clues about their February 1st rate hike decision. Could Jerome signal or foretell what the markets can expect?…probably not, but let’s see how he plays it this week. He’s been exercising a heavy dose of caution as of late.

Second – We will get all CPI data on Thursday January 12th. Month over month, year over year, and CORE CPI are all on display right before market open. Although each are important in their respective rights, I’ll be looking at the Core CPI with special interest as it also relates strongly to Core PCE and CORE PPI which give us an average understanding of where inflation lies in our overarching economy. Remember that any positive number (+) means inflation is still increasing, a Zero (0) means NO CHANGE, and a negative number (-) means inflation is going down. The going down part is key because in order to achieve the Fed’s target of 2% average inflation, we’re going to have to start seeing some negative inflation readings pulling down these highs we’ve seen over the past year. WATCH this closely. It WILL impact the Fed’s rate decisions in these first few meetings of 2023.

Third – Preliminary Consumer Sentiment comes out Friday, which will let us peer into how the consumer feels about the economy right now. We’re coming off a holiday season where some spending was higher than normal, and some intentionally spent less by choice (or force). This could all be a big toss up though because the Consumer Sentiment readings over the past 6 months have missed expectations to the upside and downside anywhere from 0.5% – 5.0%…which is a pretty big statistical variation here. So all in all, not a lot of credibility can come of this even though it’s considered an important reading.


So what’s all this mean for mortgage rates?

The general consensus is that the markets are thawing out from December still, posturing and preparing themselves for the February 1 Fed rate decision, and press conference. We’re living in the middle of a time where what the Fed says or doesn’t say dramatically impacts and alters market fluctuations. There will be a point where the mortgage markets have to begin regaining some consumer appetite to borrow once again, and that can only come with rates easing and coming back down. The BIG QUESTION is when will that happen? When will enough be enough and the markets have to start enticing aspiring homebuyers to buy homes, and homeowners to refinance, no matter what the reason may be. This week and this month it’s all about needs and desires. If you need to buy, lean in and start preparing yourself for homeownership, connect with your loan officer to best prepare to buy in 2023. There’s a LOT less competition right now. So if you found yourself getting outbid time and time again, take another look this year, you’re home might just be on the market right now. Even though inventories are lower than usual, the time on market is longer than it has been, closing prices are AT and sometimes BELOW list price, and we are starting to see more and more agents tout “seller concessions” as an emerging buyer advantage in the market right now… It might be time to take that second look…or third…or fourth :/

And for those of you who need to refinance to access cash locked up in your property, build that room addition, ADU, or prepare to take in a family member who needs assistance living out their best days, please let us know how we can help you. There are many ways we can assist in closing the gap of where you might find yourself financially today, and where you’d like to be in 3-6-9 months from now.

Mortgage Rates aren’t going to be making any dramatic changes up to new highs or burrow out some new lows, they will fluctuate, and they might do this for months. With so much of our financial future hanging in the balance of the Feds decision in relation to fighting inflation, there really isn’t a clear defined direction for rates to head. Expect ranging rates until we reach a clearing and have a destination in sight.

Thank you so much for tuning into the NEW Monday Mortgage Minute.

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We’ll see you again next week!