After the jobs report, we may be down to only one rate hike in 2026

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about the jobs report and how that’s impacting mortgage rates.   Related to this episode:   Does this jobs report kill rate hikes for the rest of 2026?  https://www.housingwire.com/articles/does-this-jobs-report-kill-rate-hikes-for-the-rest-of-2026/  HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠  https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q  More info about HousingWire  https://lnk.bio/housingwire   The Top 5:   Berkshire’s Clayton adds McGuinn Homes to Mungo as scale race widens  http://housingwire.com/articles/mcguinn-homes-sale-scale  GSEs release historical FICO 10T data, expand VantageScore 4.0 file  https://www.housingwire.com/articles/fico-10t-credit-data/  Introducing the 2026 Women of Influence  http://housingwire.com/articles/introducing-the-2026-women-of-influence  Why mortgage rates are rising, not falling, with oil under $70  http://housingwire.com/articles/why-mortgage-rates-are-rising-not-falling-with-oil-under-70  NEXA CEO Mike Kortas launches evoLend servicing company  http://housingwire.com/articles/mike-kortas-evolend-servicing   Want more from Sarah? Don’t forget to subscribe!   The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate.

Transcript

00:09Welcome, everyone. My guest today is lead analyst Logan Modashami to talk about the

00:14jobs report and how that's impacting mortgage rates. Before we dive in, here are the top

00:19five trending stories on housingwire.com. First up is a story about M&A in the homebuilder

00:24space where Clayton Homes has acquired McGuinn Homes, followed by the GSE's released historical

00:30FICO 10T data expanding Vantage Score 4.0. Then we have the article announcing our 2026

00:37Women of Influence, one of our highest profile awards, and the article Why Mortgage Rates

00:42Are Rising Not Falling With Oil Under $70. Finally, we have Nexa CEO Mike Cordes launches

00:49EvoLend Servicing Company. Okay, let's get to today's topic. Logan, welcome back to the podcast.

00:55It is wonderful to be here. And I feel like today is a good day for our work that we

01:03have

01:03done since kind of May to kind of give people kind of a heads up that really the policy shifting

01:11is important for people in mortgage and real estate. Because if you didn't know what the

01:18Federal Reserve was ever doing, and you saw oil prices at 67, you saw a jobs report miss on the

01:25headlines and have 74,000 negative revisions, and then you see the 10-year yield at what level?

01:324.46 to 4.48? You'd be like, what the hell is going on here? But unfortunately, I think what's

01:41happened is so many people were told that oil prices are going to go lower. And as soon as they

01:46do,

01:47the 10-year yield will follow it one-to-one. And that's kind of not how it operates. It didn't

01:52really operate like that when oil prices went up right away. The 10-year yield was kicking and

01:59dragging itself higher because policy was different. And it kind of reminds me of,

02:04you know, kind of like in 2023, in that period of time where the growth rate of inflation was falling

02:10and people thought mortgage rates are going to go in the fives. But I was like, no, no, no,

02:14Gandalf line, right? And then we created the Hodor line because policy is still up here,

02:20right? And I think that's, I think, the missing link discussion in the last 15 years. We were so

02:26used to zero interest rate policy and rates staying in a range that people just, you know,

02:31just assumed that was normal. Policy being up here and now the Fed shifting itself. I mean,

02:37it's, it's a shift, you know, within the first six months. Hopefully that explains the reaction by

02:43the bond market today. Of course, it's, you know, holiday trading, it's going to end soon and, you

02:47know, people are going to go off, but we're going to try to make sense of everything today.

02:52I love it. Well, let's get into the details of the jobs report because jobs reports these days,

02:56and of course it's on jobs Thursday, not jobs Friday, since it's, that's actually a holiday. But

03:02I think it's, it's interesting to me to see what, what expectations are and what constitutes missing

03:08or beating expectations because the expectations have changed so much.

03:12You know, when we did that podcast about things could be better in 2026, one of the things that

03:21we highlighted is that the Supreme court, you know, knocked off Trump's tariffs. And this is my

03:28second trade war, the first trade war, things didn't work right. You know, even with business,

03:34I mean, business investment went to zero, even with the corporate tax cuts, you know, but here we had

03:40Godzilla tariffs, we had a government shutdown, we had all hell was breaking loose, you know? And so it

03:47shouldn't be shocking that we had some negative prints when residential construction housing starts

03:53isn't really growing and manufacturing. Those two key, those are two very key sectors.

03:58And again, we would have lost eight, 900,000 jobs last year if it wasn't for healthcare and social

04:04services. But going into this year, I think the thing for me is that talking about the Fed's

04:11break-evens, the Federal Reserve has a number that all they care about is the job data being above this

04:18and then the unemployment rate could stay low and jobless claims stay low. That has actually happened,

04:24right? The unemployment rate's at 4.2%. There's questions I have on the prime major labor force

04:29data this month, but, and jobless claims are still low. So the Federal Reserve wrote papers and told

04:36everybody, we're here. Now, I might not agree with them, my break-evens are higher, but if I take the

04:41last six months of the jobs data, all the revisions and everything, it's 92,000. So the Federal Reserve,

04:49in their mind, they think, okay, this is fine. The unemployment is very jobless claims. So if you look

04:56at it in that, just forget about the headline reports, forget about what your friends say on Facebook

05:01and Instagram and Twitter and TikTok and all those crazy places. If the Fed's writing dissertations on

05:08break-evens, you've got to kind of go with that. Then that's what bond traders are doing. Again, your uncle

05:14sitting in home telling you that, you know, this and this about the labor market, nobody cares.

05:19So the bond market is basically going off of a shift of policy from where do we talk about two

05:25to three rate cuts to start the year to possibly two to three rate hikes, you know, and depending

05:33on what timeframe and anything, I don't know, Bank of America thought it would happen, you know, this year,

05:37that's clearly not going to happen now. But going out in the future, there is an actual plus that we

05:43had a very hawkish Fed meeting. We're going to have another meeting in July. A lot has happened

05:50since that last feed meeting to the end. And then maybe, at least I believe some of the more hawkish

05:57Fed members are going to jump off the boat, the boat that is led by hawkish Beth Hammock

06:04and Neil Kashkari and the smirk of Austin Goolsbee and the Dallas Fed, Lori Logan. And maybe we could

06:13peel off some of those hawkish and then we can get a little bit more realistic Fed policy, which Kevin

06:18Warsh probably wants to have going out for the rest of the year.

06:23Okay, so let's talk about that. You said we went from the expectation of two to three rate cuts to

06:28the

06:29expectation of two to three rate hikes. Given what's happened, the end of the war, and now this

06:35jobs report, oil price is falling, what do you think, you know, as far as rate hikes go for the

06:41rest of

06:422026?

06:43So the market is now priced in, they never actually priced in three rate hikes for 2026. I think Bank

06:51of

06:51America just wanted to make a name for itself out there. But now it's been pushed out to one rate

06:58hike

06:58in December. You see how things shift so fast? Yeah, they shift all the time. And this is one

07:04of the things that Kevin Warsh, why do I not like the dots is because things can shift and all

07:10of a

07:10sudden, you know, people are making policies off of backward data. We want fresh data out here. So

07:16as Kevin Warsh said in the last meeting, they've got their erasers, right? Because they've got their

07:22erasers out, they can go there and, you know, talk about changing their views. Hopefully, with the

07:29conflict over, and the labor data not as maybe strong as some people thought, we can probably

07:37remove some of the more, some of the hawkish people off of that ledge. And then all of a sudden,

07:43bond traders go, oh, well, there's more doves than hawks right now. So maybe no rate hikes

07:51going out for the rest of the year. If that is a little bit more verbally said out there,

07:58then maybe the bond market trades differently. But for now, you know, we went from rate cuts to no

08:03rate cuts to hikes. And now people are readjusting, maybe the next Fed meeting will clear some of that

08:10up going out in the future. Let's talk about the World Cup, because, you know, that's definitely

08:15generated jobs in some sectors. And then so we'll see that drop off when when the World Cup is over.

08:22What do you think this jobs report? Does this have anything to say about about the World Cup?

08:26Well, the leisure and hospitality lost 61,000.

08:32And then the labor for the prime age labor force participation rate fell in the biggest fashion

08:39ever in a month to month. So I'm terribly suspicious on on on this report, because, you know, you can

08:46make an argument that that employer rate should be much higher, just but just off of that one data

08:51line. So for what it's worth, it doesn't seem like you should have had all those hawkish people right

08:59now. I understand if oil is at 120 and the conflicts not ending. And, you know, we have no idea

09:05what's

09:05going on with that because oil inventories. I told 100 percent get that my that's not happening

09:10anymore. Right. Until that happens again, maybe two or three months down the line, we go back to war

09:16and all that stuff. But outside of that, I think you're going to probably you should you should lose

09:23some of those hawkish people in the last Fed meeting. And then maybe we could recalibrate. And

09:28that's that's really how markets work. They recalibrate a lot. I mean, remember in 2024,

09:32everybody thought we were going into a recession. My Hodor line, Hodor got broken. By the way,

09:38House of Dragons is good this season. Right. Oh, I mean, you got to see the AI dragon things I

09:43make,

09:44you know, I would have been a great dragon rider. But in any case, I think that's that's something

09:53that we need to get some confirmation on, because it's it's hard for me to think that some of the

09:58Federal Reserve members who are maybe OK, this oil thing might get really bad and diesel and food

10:02and all that. There were all these people were talking about this of the Fed, multiple Fed.

10:06Oh, this is bad. This is bad. All of a sudden oil prices are 67. And now the labor data

10:11is maybe not

10:13as strong as some some of them might have thought. Beth Hammock, I kid you not, the jobs report could

10:20have been negative for five straight months. And Beth Hammock would have still be hiking rates,

10:24you know, because of inflation and oil. But in any case, I think I think there's a there's a good

10:30sign

10:31about the next Fed meeting out there. And I think one of the things when we wrote that article, people

10:36could see that residential construction worker chart that I've used for my economic work. Usually this

10:41thing breaks. It's not looking very good. Kevin Warsh went on national TV and told people that

10:47policy is too restrictive for housing. Beth Hawkish Hammock also agreed that, you know, maybe a policy

10:55is too restrictive for housing. So that that is something that I think Kevin Warsh can jump on

11:01and try to convince some of the other people that, hey, listen, you know, let's find a way to get

11:08a

11:08workable middle for all of us. And let's kind of kick out these very hawkish Fed takes.

11:15Okay, so you said you were some of the numbers made you suspicious of this report. So does that

11:20mean that you think those are going to get revised in the next report?

11:23No, I the labor, the prime age labor force data does not fall like that in a monthly report. So

11:30I

11:30mean, I'm always going to be a little bit suspicious of any two to three month period around a kind

11:36of a

11:36huge hiring event. The World Cup is that so you can get a hiring boost, a layoff,

11:45boost in terms of that, and you kind of work itself out. So the data looks fine to me, like

11:52in general

11:52terms, but that that labor force participation decline is not normal in any circumstances.

11:58That's like a COVID thing, you know, seeing people drop off. So but again, if you hired a lot of

12:04young

12:04people, you know, for a WENT and you lay them off, maybe that distorted the data and that just

12:10reversed itself back up. So we get we get some revisions back, maybe to the positive side. But

12:17however, what we're talking about today is that even with this miss, 57,000 jobs created instead

12:25of over 100, even with the negative revisions, to me, it's still well above the six month average is

12:30well above the Fed's break evens. And the bond market is going with that. So I'm trying to like explain

12:37why the 10 year yield isn't going lower with oil prices. We've written three articles about that.

12:41We've talked about that on the podcast. But now we have a Fed. We had a Fed meeting and a

12:45jobs report

12:45that missed estimates. And we're still here. And just remember, 65 to 75 percent of the slow dance.

12:53Right. The Jodeci slow dance since 1971 has been Fed policy. And as of right now, those hawks,

13:02those doves that turn to hawks, they have not come out and said oil prices are down and the labor

13:07market is not as maybe solid. So when they do, I think things change. And it's a it's a holiday

13:12trading week. And, you know, things might get a little bit back to normal next week. But

13:17I'm trying to explain today's action because I just got lit up by messages, you know, 10 minutes

13:25after a report. Why is the 10 year yield not lower? Why is it? What's it going on? I hate

13:29you.

13:29Your goddamn numbers. We were like, screw your 4.46 and 4.48 level, you know, but

13:35this is how how things have operated for decades here.

13:39Yeah, I have to give you credit and kudos for that 4.46 to 4.48 percent on the on

13:44the 10 year

13:45yield, because it's been very precise. And you got everything going on.

13:50Yeah. If you guys want to be nerded out, you all got to come to my Instagram page. We do

13:54this.

13:54We do these videos. I have such a no life. I mean, I'm literally everyone's having a great

14:01time on their Instagram page. This technical level, if it breaks a 10 year yield, so we try

14:08to explain. We can't obviously do live live charting here, but that's where you get things

14:14fresh and and we answer questions there. But but here we are. And I see it somewhat. I see

14:22the last seven days as being somewhat positive going out in the future. If oil prices were

14:29still at 100, you know, and we still even had this jobs report. I it's a problem, right?

14:37Mortgage rates to me would be above 6.75 percent. That's what we've talked about in those articles

14:42that I could give you about 37 to 43 basis points higher if the conflict kept on going

14:47on. But our base level now is 650 to 6.75 with that 10 year yield and where the spreads

14:54are at. Hug a mortgage spread, guys. Oh, man, we'd be close to 8 percent this year if we're

14:59in 2023. But now I think, you know, I'm just trying to make sense of a very, very nerdy

15:05topic. But I just just from listening to people, they just assume that oil prices down 10 year

15:11oil will follow with it. But a lot has happened while the conflict was going on. And the Fed runs

15:18the show on this. And hopefully we get some changes, especially for the next report. I think

15:23Kevin Warsh is going to try to rally some of the people to, hey, forget Beth Hammock, forget

15:27Laurie Logan. Look at Austin Goosby smirking right there. Forget him. Neil Kashkari, you know,

15:33go away. I know what I need to do. I need you. I don't know if you ever saw the

15:36movie The Mummy.

15:37People always go, Neil Kashkari looks like The Mummy actor. And I kind of look like the

15:42other actor who is a Medjai. And we should just duke it out on Fed policy, right?

15:49Oh, my gosh, you would love that. Yes, I know. It's so funny when you talk about you don't have

15:53any life because when we come up, we did our 4th of July episode before this. And I was like,

16:00so what are you doing this this weekend? You're like, I'm doing charts. I was like,

16:04we're at the tracker. Barbecue or a pool party or fireworks. You're like,

16:09I'm going to be looking at my charts. Chart daddy doesn't go to a pool party, man. This is too

16:13much

16:13drama. So I'm just going to sit and do charts right there. Get the tracker ready and go forward.

16:18Well, that is good for us. Okay. Well, let's talk about the residential construction numbers for just

16:23a minute. So for years now, you've been talking about how before recession, that's a key indicator,

16:30right? Like almost always residential construction jobs fall in a pretty big manner before we see a

16:38recession. In fact, you've been looking at this for years and that's why you're like,

16:41we don't talk about a recession going into a recession until some of these things happen.

16:46So where are we when you look at residential construction right now, where is it compared

16:51to where it's been all year last year? You remember, remember when I went to the conference board and

16:56gave my sixth recession, red flag dissertation, by the way, that is, that was the most fun thing

17:01I've ever did in my life. This is how much highlight the conference board is the people

17:05who created the IMF, Ethan Hunt, the world bank. They give their information to the white house,

17:09the federal reserve. So I had to give my sixth recession. You were there. You got to be part

17:13of that. You got to watch that. You see how happy I was when it was over. What, what occurred

17:18in 2022,

17:19there was a lot of recessionary indicators. The leading economic index, which had a hundred percent

17:24correction rate was heading toward a recession level. However, because new home sales weren't

17:30really tanking. And we talked about the late 2022, remember November 9th, you said, November 9th,

17:34things are changing. If things are changing and you go with it, if you don't go with it,

17:38everything's going to be wrong. Well, what has happened is new home sales have basically

17:42kind of just been in a range. Housing starts are slowly moving lower and lower and lower.

17:47But, um, the, because the builders had excess profit margins and that gets into the degree,

17:54they're able to keep the employment going and moving. And we're all waiting for rates to go

17:57lower. Now the data line is at a noticeable multiple month decline, but the slope is very

18:05slow. It isn't like the previous ones. So for those of you that read the track or read the jobs

18:11article,

18:11you could see when this thing breaks, man, it breaks. And when it breaks, then eventually

18:17jobless claims go higher. We go into recession. That has not happened yet. And also that data

18:22line is, is filled with a lot of remodeling workers, right? So what's happened is people

18:27are living in their homes longer and longer. People need more remodeling. There's a lot of

18:30money out there. So that is holding things up at bay, but residential construction workers don't

18:36look good. Warehouse construction doesn't look good either. Remember the boom we had during COVID

18:40because everyone's buying everything online. That has faded. Of course, commercial building

18:46is in a downtrend because of too many apartments or we have too many buildings sitting there vacant

18:54because of work from home. But AI, the data centers, that's where the labor is going, right? So

19:01if you didn't have AI, that's why people make this argument. AI is the one thing that's keeping rates

19:07higher. So on top of all the crazy things they've said, we're going to take all your jobs and you're

19:13going to have robots doing everything. Remember the movie WALL-E? Oh my gosh. I think about WALL-E

19:18all the time. That's a great movie. Yes. That was a great movie.

19:21But I mean, think about it. AI wants you to become like WALL-E, like just sit in front of

19:25your thing

19:25and do nothing. And everybody else does all that. So there's this argument that AI is going to lose

19:31its popularity and things are going to be done. But in any case, the data center is keeping that

19:35construction, the total construction, which is different than the chart I'm talking about.

19:39But it doesn't look very healthy. So when Kevin Walsh went on national TV and said twice,

19:46housing, the policy is too restrictive for housing. It's okay for everything else.

19:50He had a point there. And I actually showed that chart on X today and said, hey, this is what

19:55he's

19:55talking about. Housing starts are at early COVID-19 recession and the labor data is fading here. So

20:02we'll see how the next Fed meeting goes with that. But there's a lot of good crumbs. Oh no,

20:09we're talking about crumbs. You know what that means? We're bringing her out again. Okay. What

20:15is economics? No, we are not saying that. Sarah Wheeler. She's not a serial killer. No,

20:21she's not. Mother economics. She is a serial killer and she wants to be cut or caught. So she'll

20:28leave you crumb. So there's some crumbs in this, in the last seven to 10 days that might say some

20:35of

20:35the hawkish people that were doves might come back. And once that happens, you know, the bond market

20:41should trade accordingly. But just remember, we went the year two to three rate cuts. And now people

20:47were talking about two to three rate hikes. A lot has changed, but a lot has changed recently right

20:52now. Maybe if it wasn't a short trading week or short trading day, things might be different, but

20:58we could go on to the next week and, and, and, and kind of start over. But there's a lot

21:03of data

21:03there that might question some of the more hawkish takes out there. Listen, I think this is good news.

21:08And for all of our housing professionals who are still working on this weekend, they're not taking

21:13off, right? They're showing houses, they're working on loans, they're doing all that. Like, listen,

21:17this is some good news. We're not, we, it doesn't look like we're going to have two to three rate

21:21hikes. In fact, maybe we even miss out on any rate hikes this year. That would be amazing. So

21:26thank you. You know what, just remember that the baseline premise of the Federal Reserve going

21:31into this year is that the tariff inflation would wind itself off. Some of the Fed members have said

21:36that like Fed Williams from New York said, we were seeing that tariff inflation wind itself off.

21:42So the second half should be, if you get oil headline inflation down, what are you going to do?

21:47Make it chips? You know, the breadth of inflation is not like it is normally, right? You have some

21:53sectors, you know, again, AI, Apple's raising their costs because of chip shortages should

21:58really rates rise because of that, you know? So it's, it gets, it gets interesting. It gets

22:03injured. Again, all of, we can do this discussion because the conflict's over. The conflict wasn't

22:08over and oil's at 120 and we could go, you know, it's a whole different story, but

22:13not bad considering. I know a lot of people are disappointed this morning. So I feel like I was

22:18getting tomatoes thrown at me, you know, because the 10 year yield wasn't kind of there, but listen,

22:22I don't have to understand everybody or the Federal Reserve. I just have to be able to operate in it,

22:30right? So I'm just trying to tell people the heads up of what I think the market is trying to

22:35price out

22:36now. And I could understand the frustration about lower, lower, lower oil prices. And that hasn't

22:42really moved the needle too much, but there, there is a, there is a kind of a positive theme now

22:48because of oil prices are down. The labor data isn't maybe as strong as some fed people think,

22:54but we'll take it one day at a time. That's our job is to do this. And this is why

22:58we do this

22:58podcast four times a week. Cause there's always something to talk about.

23:01There is always something to talk about and you're, you've been remarkably accurate on the

23:0710 year yield number. So, you know, it's not, it's not up to you what that number is,

23:11but appreciate you walking us through it. Everyone needs one good nerdy friend. I say,

23:16let the chart daddy be your nerdy friend, right? You'll be our nerdy friend. And we'll look forward

23:21to seeing the tracker this weekend. Logan, as always, thank you. And I hope you have a great

23:264th of July weekend doing whatever it is you want to do. If that's looking at charts,

23:29good for you. You keep doing charts and call of duty. There you go. That's a good,

23:35that's a good weekend. All right. Thank you.

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