Key facts
- Logan Mohtashami is previewing the jobs report and its implications for the bond market and housing.
- The ADP jobs report came in weaker than anticipated, with hiring slowing.
- Mohtashami believes weaker labor data is needed for mortgage rates to decrease.
- President Trump and FHFA Director Bill Pulte have publicly called for Fed Chair Jerome Powell to lower interest rates.
- Mohtashami has raised his first recession warning flag.
- He expects all jobs lost during COVID-19 to be recovered by September 2022.
Logan Mohtashami, HousingWire's lead analyst, provided a preview of the upcoming jobs report and its potential implications for the bond market and mortgage rates. In a discussion hosted by Editor in Chief Sarah Wheeler, Mohtashami explained that weaker labor data, such as the recent ADP report which showed hiring momentum slowing to 37,000, could lead to lower mortgage rates.
Mohtashami believes that the Federal Reserve's policy decisions are increasingly focused on the labor market rather than inflation when considering interest rate cuts. This stance has been a source of frustration for President Trump and FHFA Director Bill Pulte, who have publicly called on Fed Chair Jerome Powell to lower rates, with Trump noting that "Europe has lowered NINE TIMES!" Pulte echoed this sentiment, stating, "Jerome Powell must lower rates, and now. Enough is enough."
Mohtashami also highlighted that while job openings remain above 10 million and jobless claims have reached lows not seen since 1969, there is still a significant number of jobs to recover from the COVID-19 pandemic, which he anticipates will occur by September 2022. He has also raised his first recession warning flag. The analyst noted that the two-year Treasury yield exceeding 0.56% typically signals an impending first Fed rate hike, which can strengthen the dollar and potentially lower commodity prices and inflation. He advised against assuming mortgage rates will rise significantly in the near term, referencing a critical level of 1.94% for mortgage rates.