Rates React to Noise
Global tensions threaten rate stability
Happy Friday! Let’s dive into this week’s key market-moving news, starting with last Friday’s employment reports and ending with rising global tensions that could ripple through mortgage rates.
Conflicting Employment Reports Spark Market Confusion
Last week, we saw a stark contrast between two major employment reports. ADP, the largest private payroll provider in the U.S., reported just 37,000 jobs added in May — a weak number that initially rattled the markets. Then, just two days later, the Bureau of Labor Statistics (BLS) released their data showing 139,000 jobs created for the same period.
That’s a difference of over 100,000 jobs, and frankly, it’s hard to reconcile. The discrepancy raises real concerns. The BLS report continues to drive market sentiment and Federal Reserve policy, but if their data is flawed — which even they admitted in a recent Wall Street Journal article — it could lead to unnecessary mortgage rate hikes.
To make matters worse, the March and April jobs data were revised down by 95,000 jobs, but markets don’t react to revisions — only to the initial reports. I believe mortgage rates today are about 0.50% higher than they need to be, all due to this noisy and unreliable employment data.
A Bit of Relief: Inflation Numbers Surprise to the Downside
On Wednesday, the Consumer Price Index (CPI) came in softer than expected.
- Headline CPI rose just 0.08%
- Core CPI (which strips out food and energy) rose only 0.13%
These are both encouraging signs, especially considering this was the first inflation report that captured data post-tariff implementation. So far, tariffs don’t appear to be adding significant inflationary pressure — good news for rate watchers.
Unemployment Claims Are Creeping Up
Thursday’s initial jobless claims came in at 248,000, continuing a three-week trend of rising unemployment filings. While one high number could be a fluke, three weeks in a row raises eyebrows. It’s a trend we’ll continue to monitor closely — a softening job market could give the Fed more room to consider rate cuts later this year.
Global Conflict Could Drive Oil Prices — and Inflation
Overnight, news broke that Israel struck Iran, and while the human toll is devastating and most important, there are also economic implications. Iran supplies about 4% of the world’s oil, and oil prices jumped on the news. If this situation escalates and oil fields are impacted, we could see a secondary spike in inflation — not great timing when rates are already elevated.
One Last Boulder Luncheon — Don’t Miss It!
If you’re a Realtor, I’d love to see you Thursday at Blackbelly in Boulder for our final “Winning in a Buyer’s Market” class in this location. This is our fifth and final Boulder session, and every event has sold out.
If you haven’t RSVP’d, do it now — seats will go fast.
Have a great weekend,
Brian Manning
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