Good Friday morning from your Hometown Lender. Let’s dive into Friday’s big market analysis data!

Yesterday, bonds tanked when the smoke and mirrors behind the deal between Iran and Oman opened. The Strait of Hormuz fell apart. The details seem to differ by headline, but the one consistent thing is that there won’t be a real deal that the U.S. will accept. Oil didn’t like the news and pushed higher. Bonds lost ground and ended the day down quite a bit. What a difference a day makes.

Rates this morning are better as bonds get a big boost and are enjoying a nice relief rally that the labor market data came in much weaker than expected (I am always conflicted about being happy for poor economic data, which helps rates vs being unhappy as it shows the economy isn’t doing well). Today’s report was a huge miss, as July payrolls came in with a loss of 23,000 jobs, not creation but loss, and June and May gains were revised downward. The unemployment rate declined to 4.1% from 4.2%, and the labor force participation rate is now at the lowest level since February of 2021.

That means that a lot fewer people were looking for jobs, so even though the unemployment rate declined, it was because there were fewer people out there looking for jobs. Otherwise, we’d see more unemployment. Average hourly earnings gained 0.1% from the prior month and 3.2% from last year, which is what the Fed will look at as far as wage inflation.

Market Analysis: This was a huge miss and relieves pressure from the Fed to hike rates.

Markets are now only pricing in a 40% chance that the Fed will hike rates in September. Before the jobs data came out, markets had a 55% expectation that the Fed would hike rates in September.

Market Analysis – From a higher and better view:

Quick Snapshot

• Jobs — BIG Miss: The U.S. economy lost 23,000 jobs in July, versus expectations for roughly 80,000 jobs added. May and June were also revised lower by a combined 103,000 jobs. This morning’s report just changed the conversation from “Will the Fed hike?” to “Can the Fed afford to?”
• Unemployment: The unemployment rate actually fell from 4.2% to 4.1%—but not for the reason we would like. Another 264,000 people left the labor force, pushing participation down to 61.4%, its lowest level in roughly 5½ years.
• 10-Year Treasury: The 10-year Treasury dropped to roughly 4.63% following the jobs report as investors bought bonds and reduced expectations for another Fed hike. That is welcome news for mortgage pricing.
• Mortgage Rates: National daily averages are around 6.75% for a 30-year fixed and 6.12% for a 15-year fixed. Freddie Mac’s weekly 30-year average rose yesterday to 6.69%, its fifth consecutive weekly increase—but today’s bond rally should provide lenders an opportunity to improve rate sheets.
• Fed Watch: Before this morning’s report, markets were seriously considering another September rate hike. That probability dropped sharply after payrolls were released. The Fed held rates at 3.50%–3.75% last week, with three policymakers favoring a hike. Today’s employment report gives the “hold” camp considerably more ammunition.
• Stocks: Wall Street likes the weaker-rate outlook more than it dislikes the weak jobs report—at least this morning. The S&P 500, Dow and Nasdaq are higher, with technology leading as investors anticipate a less aggressive Fed. Good economic news is good news… except when bad economic news becomes good market news. Welcome to Wall Street.
• Oil & Geopolitics: Brent crude has fallen to roughly $82, with WTI near $77, as Iran and Gulf states discuss a potential temporary arrangement to reopen the Strait of Hormuz. Both benchmarks are headed for weekly declines of more than 9%. Lower oil is another welcome development for inflation—but the negotiations remain fragile.
• Politics & Trade: Tariffs remain an important inflation wildcard. Markets now have two competing forces: a clearly weakening labor market arguing for easier Fed policy, while tariffs and geopolitical risks could still keep prices elevated.

Why It’s Happening (Market Analysis)

Today’s message is dramatically different:

Weak jobs + downward revisions + lower oil = better conditions for bonds and mortgage rates.

But there is a catch:

A weakening labor market is good for rates only until it becomes bad for the broader economy.

In plain English: We finally received genuinely rate-friendly economic data—but nobody should be cheering that Americans lost jobs.

What It Means

This is one of the more encouraging mornings for mortgage bonds we have seen recently.

The Fed now has a harder case to make for raising rates again in September, particularly after the last three months of employment data were revised materially weaker.

Next week becomes critical.

• Wednesday: July CPI
• Thursday: PPI
• Friday: Retail Sales

If inflation also comes in cooler, the combination of weaker employment + lower inflation could provide meaningful support for mortgage rates.

If CPI runs hot, however, the Fed gets stuck between inflation and employment—and bonds could quickly give back today’s improvement.

Market Analysis – Housing & Mortgage Strategy

This remains a structure-the-payment market, but today creates a little more optimism.

The best conversations remain:

Seller credits • Temporary and permanent buydowns • Builder incentives • Strategic ARM options • Debt consolidation • Future refinance planning

Today’s move is also a reminder why buyers should remain engaged even when rates are elevated.

Markets can change quickly—and qualified buyers who are already prepared are positioned to take advantage when they do.

Lock vs. Float

Closing within 15 days: Lock or strongly consider taking today’s improvement.

• 15–30 days: Cautious float bias if the borrower has tolerance for volatility and a clearly defined ceiling.
• 30+ days: Today’s jobs report improves the argument for a carefully managed float heading into next week’s CPI.

Today’s guidance:
Enjoy the rally—don’t get greedy. Better pricing is an opportunity

Stay safe and make today great!