Portland Mortgage Market Update — July 3, 2025

It was Jobs Week this week, and the pattern we have gotten so used to continues. The pattern goes a little something like this- early in the week we get a Jolts report that hints at some softening in the job market. Then we get an ADP report showing a much weaker employment/labor market—one that seems to be more in line with how we are "feeling" about the economy. Rates have been enjoying this narrative and are set to break out in a huge rally if the BLS report comes in weaker as well, and now traders are starting to talk about a Fed rate cut at the next meeting. Then the BLS report drops at the end of the week claiming much STRONGER numbers for the labor market, completely killing the momentum we had.

If the two reports are seemingly at odds, why do we trust the BLS more than the ADP report? It is not that we "trust" the BLS report more (we don't), it is that the Fed bases its policy on the BLS report. The ADP report is made by a private company, whereas the Bureau of Labor Statistics is an agency of the United States that compiles these reports every month, so the Fed has to base their decisions on data provided by other, non-partial, agencies. The problem is the BLS, while consistently reporting better than expected number initially, has a habit of being grossly inaccurate and must issue revisions in the following months to bring their over-estimations back in line with reality. Unfortunately, by the time they issue the revisions the damage has already been done.