This week has been eventful, and tomorrow is Jobs Friday. The labor data released earlier this week was generally OK — no significant issues arose. The job openings data was acceptable, the ADP jobs report exceeded expectations, and jobless claims dropped to a lower level. However, with Jobs Friday approaching, any negative findings in that report could lead to a decrease in yields, as the full short-term impacts of the tariffs have yet to be realized. So, prepare for one more day of volatility. The last report shows that the unemployment rate rose from 4% to 4.1%.

One important data point that we consistently monitor in the jobs report released on Friday — which plays a vital role in my recession model — is the number of residential construction workers. Last month, we did not see growth in this area, which presents an opportunity to analyze the factors behind this trend. I look forward to examining whether this data point shows any changes in Friday’s report, as it could offer valuable insights for our market understanding.

For me, labor always takes precedence over inflation in this discussion. Although many anticipated that mortgage rates would increase this year due to conversations about tariffs, the recent softer economic data has been the primary factor driving lower yields and mortgage rates.

As anticipated, this week has been quite eventful, and it’s not over yet. With just one day remaining, I will be recording the latest episode of the HousingWire Daily podcast to share my insights on tariffs and mortgage rates. The recent notable decline in the 10-year yield is nearing my lower-end forecast. To confidently move past that level, we need to observe some softer labor and economic data. I’ll aim to provide clarity during these turbulent times, and I look forward to discussing insights in preparation for Jobs Friday.