Portland Mortgage Market Update — March 8, 2024

Lots of events and activities led to improvements in rates! Mid-week was dominated by Powell testifying before a congress and the latter half of the week was all about jobs jobs jobs. The end result has been an improvement in interest rates back below the 7% range.

Powell was resolute this week in saying that they intend to hold the Fed interest rate at the current level until they have "greater confidence that inflation is moving sustainably toward" its 2% goal. He acknowledged that it has eased a bit but basically they do not have enough data showing it is in check to justify a rate cut. He also pointed to a strong jobs market, which may have been a bit premature because

The BLS jobs report issued today showed an increase in jobs but also higher than expected unemployment. First, the Seasonally Adjusted Jobs reported an increase of 275K. However, 151K of that is based on a Birth/Death model that relies on small businesses starting up and shutting down. The Birth/Death model is an estimate- as in, they don't generate the number from hard data or survey. The ADP report which came out earlier this week showed an increase of only 13K jobs in small businesses and is based on hard data, so there is a gap of about 138,000 jobs from ADP's (verified) data and the BLS reports (estimated) data. Odds are that 275K number is going to be revised downwards in coming reports.

Speaking of downward revisions, this month's report issued a 124,000 revision to last month's report, and a 43,000 revision to December's. If you recall, last month's jobs report was the one that came in hot out of nowhere and absolutely killed all the momentum interest rates had to keep improving. It caught everyone on their heels, made rates worsen and (come to find out) it was wildly inaccurate.