Strong Jobs Data Lowers Odds of Rate Cuts as Bond Yields Signal Caution

J.D.: Our first guest joins us remote. Mr. Mark Hamrick, a friend of the show, senior economic analyst at Bankrate. Mark. We'll talk mortgages. We'll talk key pieces of economic data. Everything else on your radar. But first I got to get your take on what you see for the tape here today,Mark.

Mark: Well, Peter's comments about the breadth of the market are pretty stunning and sobering. You know, volatility has generally been working to the upside and investors have embraced that. Obviously some correction in the market is probably overdue. At Bankrate, our focus is really for long term investors. We don't have a trader mindset or mentality or even spend much time looking at that. But what I would say is one of the more interesting things to me that has happened here is we've got the ten year yield down to the lowest level this year. And that to me, suggests that maybe something more maybe fundamental to this rotation and potential, a continued selloff in the market. But for long term investors, the majority of which are invested in the market for the purpose of their retirement. Lower stock prices mean more bargain opportunities. And. Uh, traders, uh, are one thing. Long term investors or another. You need to be right twice the time the market, and that's virtually impossible.

J.D.: Yeah, it's an interesting note there on yields. The ten year Treasury yield down I think it was seven basis points down to 4.1 the lowest. It's been a few weeks. So but listen it's all end to the yield curve that we're down today Mark. That tells us there was at least some rotation into fixed income. What will you be following as we open up markets for tomorrow, the final trading day of this very busy week down here on Wall Street?

Mark: Yeah, I think you're right in that you do look for the potential for a sharper selloff. And then we'll see whether we get the buy the dip mentality. Uh, so you know, there hasn't been anything that's changed radically economically this week. If anything, we had more reassuring data with the employment report that obviously was stunningly to the upside with the payrolls number and sort of not much to see here with respect to the benchmark revisions compared to the preliminary estimate. And of course, the unemployment rate edging down ever so slightly. So obviously What the market does is is of keen interest to many Americans and high net worth individuals as well, who've been powering a good part of consumer spending here.

J.D.: Yeah,Mark, it seemed like the investors didn't really know what to make of that delayed January jobs report. It kind of seemed like it had a little bit of something for everybody. Something for the hawks, something for the doves. Obviously, we made a lot about the big downward revisions year over year, from the spring of 24 to the spring of 25. Any big surprises in that report to you? And of course, this sets the stage for CPI inflation print, which we will get tomorrow morning around 8:30.

Mark: Well, I think if anything, the surprise is the consistency of lack of performance in sectors that we see on an ongoing basis, where you've got health care, social assistance, really doing the heavy lifting for job creation in this country. obviously within the context of 5 million monthly hires a month. But I think perhaps the more significant takeaway for more sophisticated viewers of of the data as well as market performance, is there can be no urgency at this point on the part of the Federal Reserve, I think, to want to reduce interest rates. It's just one month's data, but getting the unemployment rate back down to 4.3%. You're not necessarily a maximum employment. But when we know supply and demand of labor have both been being reduced and we have the unemployment rate still going down to 4.3%, I think that's fairly remarkable. The resilience of the job market, even with the somewhat alarming challenge of Gray and Christmas data, we saw where job cut announcements were the worst since they've been tracking, and hiring intentions were the worst since they've been tracking. But we haven't seen those job cut announcements filter into the new claims, as we saw just today, really sticking in a range over the past three years. So yeah, they rather I should say the CPI is next up. That will be interesting. There is a tendency to try to pass through some price increases every January on the part of some kinds of firms insurance being among them, or subscription services. But if anything, we should see, you know, headline and core getting down to 2.5% year over year.

J.D.: All right. Mark Hamrick, we got to leave it there. We'll talk mortgage rates next time you're on the show. Thanks for kicking us off.