Portland Mortgage Market Update — March 7, 2025

It was jobs week this week! The ADP report kicked things off on Wednesday , coming in at almost HALF the expected job creations. The report showed 77K new jobs created during the month vs the market expectation of 140K. Then today's BLS report dropped showing a 151K increase vs the expected 170K. They also revised the January's numbers downward to 125K from 143K. Beyond these headline numbers, there were some interesting notes:

• The Birth/Death Model (creation of small businesses) showed an increase 136K jobs in the BLS report which obviously helped bolster the 151K increase. However the ADP report earlier this week showed a 12K REDUCTION to this facet. So there is quite a gap between what the BLS is finding vs what the ADP is reporting, and I would guess the 151K number is going to get revised downward in the coming months. • Average Hourly earnings rose 0.3% but hours worked are down to 34.1, which is a 15 yr low

The market took the headline numbers in stride but once these details were digested it really helped rates reverse course from their mid-week worsening

How did rates worsen? Don't weak jobs numbers help interest rates improve? Generally, yes! However the market is not always rational. The short-lived mid-week tariffs brought fears of inflation despite every pundit on every news source commenting that tariffs would be a one-time price bump and would not kick off an inflationary trend. Treasury Secretary, Scott Bessent was on CNBC this morning and re-iterated this fact (along with commenting to the lowering of oil prices and mortgage rates). He also mentioned that the market is going through a "detox period" after becoming addicted to government spending. It's going to sting for a while and as a result, the economy they inherited "is starting to roll a bit".

So we opened this morning to a bit of a rally, until Fed Chair Powell spoke. With the jobs reports coming in weaker than expected and fears of inflation being tamped down, it appeared the stars were aligned for forcasting another Fed rate cut to happen sooner rather than later. Then Powell spoke and said the White House "is in the process of implementing significant policy changes in four distinct areas: trade, immigration, fiscal policy, and regulation… It is the net effect of these policy changes that will matter for the economy and for the path of monetary policy… We do not need to be in a hurry, and are well position to wait for greater clarity." In saying this, he squashed any hope for a quick rate cut and the rally abruptly ended. Currently, rates are right around where they started the week.