Portland Mortgage Market Update — December 6, 2024

Rates are encouraged today on news from the BLS jobs report. It was jobs week this week with the ADP payroll report earlier and the BLS Jobs report today. The headline from the BLS report showed a bit of a larger than expected increase in job creation (227,000 new jobs created vs the expected 214,000), which would usually be bad news for rates. However, traders seem to be focusing on the unemployment numbers therein, which came in at 4.246%, barely rounding down to 4.2%.

Let's break that unemployment number down a bit. The BLS report has two components, a Business Survey and a Household Survey. The Business Survey is where the headline job creation portion comes from (that 227K number). The Household Survey has it's own job creation component showing a stark difference of 335K job LOSSES. It is also where the unemployment number comes from, but the BLS ignores the unemployment if the household being surveyed cannot confirm they have been actively seeking employment over the past 4 weeks. If they cannot confirm that, they are not included in that unemployment figure. If we add those back, the unemployment percentage would increase to around 4.4%

This paves the way for the Fed to cut rates again at their meeting on the 18th. The market is currently betting an 87% chance we see a .25 basis point cut in rates.