Good Friday AM from your Hometown Lender,

Today was the day markets were waiting for.

The most important data release of the month, the jobs report. Markets were already expecting a muted number, so it was a gamble on just how low the release would be. On expectations of 160k, the print was only 142k and there were negative revisions to the last two months. The unemployment rate ticked down barely to 4.2% as expected. This was more from the fact that 120k new people entered the workforce. If you were to look at the U6 employment data which included people who are underemployed and who have gotten frustrated and left the workforce, that real unemployment rate is 7.9%.

Wow! So, what happens now?

The futures market is currently pegging a chance of the Fed cutting by 50bps in two weeks at 55% up from 40% just yesterday. Several Fed speakers are out saying the Fed should cut aggressively. If CPI and PPI come in weak, showing that inflation is continuing to retreat as the job market struggles, a 50bps cut is the likely outcome. One thing I cannot stress enough is that even with the 10-yr note yield dropping as it has and is, currently down to 3.69%, the spread between 30-yr mortgage rates and the 10-yr note is still way out of whack at 275bps. That should be in normal times 175bps.

What that means is that rates should be 1% lower than they are.

The Fed needs to stop selling the bonds they hold and stop competing with the markets. If the Fed stops selling, mortgage bonds will be in more demand and rates will improve more on that than the Fed cutting the discount rate.

Property prices are going up. I still say the time to buy is now.

Stay safe, enjoy the weekend, and make today great!