Portland Mortgage Market Update — November 22, 2024

Rates held more or less steady to slightly improved his week. World events like Nvidias earnings and Russia's retaliation in Ukraine caused a small push to bonds but for the most part there wasn't much economic data that proved to be market moving for most of the week. That is, there wasn't until yesterday's QCEW preliminary numbers were released.

What's the QCEW and why is it important? The QCEW (Quarterly Census of Employment and Wages) is released by the BLS and provides more thorough look at the strength of the labor market. While the BLS also releases the monthly jobs reports that prove so important to our current rate environment, the QCEW is generally thought to be more accurate and often times "cleans up" the errors made in the monthly reports since a big chunk of those include impugned data (aka estimates based on historical trends). So in short, the monthly Non-Farm Payroll reports are released without the full dataset, then the QCEW comes along and is based on actual data reported by employers and is more or less an audit of the monthly reports to provide the most accurate labor statistics.

So what happened with the QCEW yesterday? First, some context: our last QCEW report showed the BLS had overstated nonfarm payroll figures for the previous 12 months by about 818 THOUSAND jobs and led to the BLS making some downward revisions to the subsequent NFP reports which helped rates improved. While the next formal QCEW won't be released until February, the preliminary numbers reported by 95% of the labor market show they overstated by almost 1.25 MILLION jobs. This means that the BLS's monthly reports have been showing double the employment than what is actually happening in the labor market. A significant downward revision to the labor numbers could help mortgage rates in the coming months.

Currently rates are trying to improve based on news across the pond. Germany and the UK released reports today that show big red signs of a recession. Since we live in a global economy, it is raising fears that the recession may spread to us which would further improve interest rates.