- 6 days ago
On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about the importance of jobs week, and especially the Jobs Friday report. as the war with Iran intensifies.
Related to this episode:
Housing demand holds up despite mortgage rates at yearly highs
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To learn more about Trust & Will click here.
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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.
Related to this episode:
Housing demand holds up despite mortgage rates at yearly highs
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
More info about HousingWire
https://lnk.bio/housingwire
To learn more about Trust & Will click here.
http://trustandwill.com/
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.
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NewsTranscript
00:09Welcome, everyone. My guest today is lead analyst Logan Motoshami to talk about Jobs Week and what
00:15that even means when we're in the middle of this escalating Iran conflict. Before we get started,
00:20I want to thank our sponsor, Trust in Will, for making this episode possible.
00:25Logan, welcome back to the podcast. And wow, what a tracker.
00:29Among all the crazy things we've had in the last four weeks, if you did not know there was a
00:37conflict and oil prices got to 115 on Brent crude and the 10-year yield had spiked from like 398
00:45to
00:47448. If you saw the tracker every single week, you would think, wow, what a boring, normal housing year.
00:54But we don't live in that society anymore. But the tracker article, again, positive year over year.
01:01The growth rate has slowed down now.
01:03Positive what year over year?
01:05Weekly pending sales are still positive year over year. Purchase application data is still positive
01:09year over year. The growth rate has slowed down. Purchase application was down 5% week to week.
01:15We had a week to week decline in pending sales, but still positive on a year-to-year basis.
01:20So what do we know? What do we've always said in the last three years? Whenever mortgage rates get
01:26to 6.64 and go below, housing data gets weaker or gets better. But when mortgage rates get above 6
01:33.64
01:34and head toward and above 7%, the housing data gets softer. But if you didn't know all the stuff
01:42around the world and you just saw the data, you just saw the numbers. Why do we like numbers, Sarah?
01:48Closest thing to the handwriting of God. Closest thing to the handwriting of God. And you're like,
01:52wow, this is a boring year. I mean, inventory growth is 5.69%. I had to talk about Florida over
01:59the weekend because a lot of people want to know about Florida. There's a noticeable decline year
02:05over year in Florida now on inventory because it is not housing 2008 or as the kids say these days,
02:11worse than 2008. Well, there's some real winners out there, Sarah. In any case, always remember,
02:18Florida was working from an elevated levels of inventory. So the national data just didn't have
02:24that. So it's a very high comp, an easy comp to show a decline year over year. So just to
02:32put that
02:34concept there. Now for our data, if everything goes astray, we might have some negative year over
02:39year prints on inventory there. But in any case, it's a very boring year on that side. But because
02:44of everything that's going on, and just remember, we got to the inflection point. So we ran the entire
02:50year. You take the snow data out of the equation, positive start to the year. But now we get to
02:57that
02:58point to where mortgage rates are down on Monday morning. That in the past, we've always seen
03:04mortgage rates at 7.75% in 2023, you know, seven and a half in 2024, seven and a quarter
03:12in 2025,
03:12because the spreads are higher. But now because the spreads are much better this year, it's kept
03:17the rates below that 6.64 line. So for those that read the tracker, and again, now everyone has access
03:24to housing wire intelligence. You could have access to all the data that the tracker has in your own
03:28area. But it's going to be very interesting going out if mortgage rates do keep on going higher,
03:36because we've ran the full year with a very positive demand curve with rates under 6.64. But
03:42really, the best data came in six and a quarter and under. Okay, so I think one of the surprises
03:47to
03:47me was we saw oil go up over the weekend, Sunday night. And yet here, as you said, the 10
03:54year yield
03:54came down rates, mortgage rates came down as a result. Were you surprised? So for those that
03:59follow me on Instagram, we're just doing lives like all the time. And to me, the 10 year yield,
04:05just for now, is forming kind of a double top around 4.46 and 4.48. And what happened on
04:12Friday
04:13is that even though oil prices were elevated, the peak levels of the 10 year yield, it's it fell
04:19throughout the day. So that's our first divergence. And in the oil bond trade. And then over the
04:27weekend, we had a whole bunch of news, you know, we're just all over the map for we're going to
04:31get
04:31a deal done to we're going to blow up everything, whatever it is, it's just, you know, it's absolute
04:37chaos. It's a Bosch painting on tweeting about conflicts. Now, in any case, the 10 year yield fell
04:43throughout the night throughout the morning, and it's like, 4.33% right now. So we have a noticeable
04:50change. So for for right now, you know, I thought 450 to 460 would be that level to where, you
04:57know,
04:57it's really hard for me to get the 10 year yield above 460 unless the Fed is like, starts really
05:02guiding hawkish, or the jobs data starts to really, you know, because inflation is picking up.
05:09But man, for now, keep an eye on that four, four, six, four, four, eight, you know, it's jobs week
05:14this week, you know, even though the Iran conflict is number one right now. There is a point to where
05:21the 10 year yield does not correspond straight to oil in this regard. And if the economy is getting
05:28weaker, it's harder for it to keep on going higher. It's not that hard working from a very low level.
05:34But when you start to get up 450, 460, you're going to have to earn it. So that that'll be
05:41the
05:41interesting thing with this week with jobs week coming up. Okay, so I have some jobs week questions.
05:45But first, I want to say you mentioned a double top. I don't know what that is. I don't know.
05:50Tell me
05:50why I do I need to care about that if I'm in the industry and I'm running, you know,
05:55Yes, you do. Because for right now, that 10 year yield at 4.46, 4.47, if it doesn't break
06:03that,
06:03and you get a deal done, it's going to be very hard for mortgage rates to make that next leg
06:09higher
06:10from 6.64%. But again, a lot of people were confused about the bond yield movements. But
06:18technically speaking, that's the that's the line that I was kind of keeping an eye on. And we saw
06:24a really strong reversal. Now, we've always talked to this can't escalate to the next stage without
06:31creating like really world drama. So there's a lot of tough talk out there. But I when you make
06:38that next move from here, you're talking about you're talking about global supply shortages and
06:43big problems for for a long time. And again, it's a midterm year. And the Trinity is all gone. The
06:50dollar is above, you know, 100. Now, again, oil is up rates are up everything that we thought the
06:57Trinity thing needed to happen. For those who don't know, we all said that the White House probably
07:01wants a lower dollar, lower energy prices, lower mortgage rates to make this trade war work. But
07:10here. It's just very interesting now because we're at that key inflection points for a lot of things
07:14for the war, for the conflict, for oil supply shortages, diesel prices, nitrogen, helium, there's
07:20all these things that just, boy, you take it from the next level here, man, it is, it is very
07:25difficult.
07:26So I am, Powell talked about this, Jerome Powell talked this morning, he said, I'm very bullish on
07:31the medium and long term. He didn't say anything about the short term. You know, and again, there's
07:37pre 2010, whenever we had an oil shock, it always, you know, it always like a recession happens.
07:452008 was, that was just, you know, another layer of stress into the system. But here,
07:51we've had oil prices here before in 2011 to 2014. And, you know, obviously in 2022, but
07:58the bond market is, you know, fighting again. It fought to all the way up here, but you get to
08:05certain levels and it's to make that next move higher. You probably need either the jobs data to
08:12get better or the Fed just basically said, hey, guys, we're going to get more hawkish here. And
08:17so far, that hasn't been the case. So when I talk about double tops, keep an eye, 4.46, 4
08:21.48.
08:22If we don't break above there and we get a deal done, maybe the worst is over. But we'll see.
08:28This
08:28is such a fluid daily event. And who knows what's really going on behind the scenes at this point.
08:34So let's dig in a little bit on the jobs, which you've already talked about. So if it comes in
08:39bad,
08:39it really is. I mean, the power said he's, you know, there's no more rate cuts, right? Based on
08:46everything on the inflation side. So how much does the jobs report matter this week?
08:51You know, there was no rate cuts priced in last week. There's a smidget of a rate reduction this
08:59morning. So it's again, this is such a fluid, fluid movement, but I always believe that the labor
09:06data matters. Doesn't matter about what happens to oil prices because it didn't matter to inflation.
09:13Last year, inflation was rising, but the 10-year yield fell the entire way because the labor data
09:18got weaker. So if you get weaker data, then obviously that's important. But I don't believe
09:27it's going to, it's, to me, it's always about jobless claims because the Fed really revolves its
09:32economic cycles around growth and investment and jobless claims data. So if you get another negative
09:37report, they might say, okay, we will be mindful of labor, but it's not breaking because the
09:42unemployment rate is. Now, if you have a negative report and the unemployment rate rises, you know,
09:47that'll get their attention. But I'm really interested in that 4.48 level because we talked
09:55about this, you know, last year, it was 4.50 to 4.60 where the 10-year yield got in
10:00the White House
10:01blinked. Here, we'll see. Again, this kind of conflict, you're just, you're just working 24-7
10:09live on and oil prices are down just a little bit from the highs. You know, they're talking about
10:15letting ships go. But just remember, until you see ships flow, flow down that straight,
10:20right? No pirates shooting at it or anything, no drones attack. Once that happens, then, you know,
10:27you could, you could take the worst is over. But if you're on the verge of a blowing up a
10:31bunch of
10:31power plants and everything and everyone, all the neighbors are getting shot, then it could escalate.
10:35So very, very important week. And oddly enough, it's happening with Jobs Friday and Jobs will be
10:42coming. Yes, it is. And yeah, I mean, if anything, we can be happy in the mortgage industry for a
10:48couple of things that rates haven't followed the oil up when it's, you know, they have,
10:54there hasn't been like that direct one-to-one correlation like we were worried about early
10:58in this conflict. And then secondly, that there is still, the demand is still holding up. Now,
11:04every week that goes by, you make this point in the tracker, every week that goes by with these kind
11:09of conditions out there and the 10-year yield up and mortgage rates above six and a half makes it,
11:15you know, the demand is going to get hit at some point.
11:186.64 above seven, go all the way down to late 2022. Every time rates get down to six,
11:25we've always had a couple hundred thousand home sales. Then they shoot right back up above seven.
11:30Then that home sales, a couple hundred thousand we grew, comes all the way back down negative again.
11:34And we just flow back and forth. This is the first year that we had under six and a quarter
11:39and we
11:40were running, right, with less volatility and inventory up and price is not escalating out of
11:45control. Very healthy backdrop. So it is good to see this test at least to what happens. Obviously,
11:52mortgage rates are down this morning. We'll see what happens on Tuesday. But I'm very fascinated
12:00with the tracker data going out the rest of the year. Because what happened last year is,
12:04even though rates were 6.75 to 7.18, housing data was okay. It wasn't showing any kind of growth,
12:11but it held up fine. But here, I just think that, man, we had something good. I mean,
12:19to have the demand hold up even with more than half a percent rate move in a short time,
12:26but it usually takes a little time for it to filter itself into the data line. And we saw growth
12:32slow down,
12:33both in purchase application data and the weekly tracker. But it isn't like
12:372023, 2024, where rates get above 7%. And you see that noticeable cool down from sales growth. So
12:44we'll see how it goes. I just think with jobs week and this conflict being at this stage,
12:51do we have troops? Is Trump just bluffing here about, because if Trump puts troops on the ground,
12:59then the neighbors are going to get shot, and then it escalates into something very dramatic. So
13:06I don't know if the market just doesn't believe yet that's going to happen. Because if it did,
13:11oil prices would be a lot higher, right? The 10-year yield would not have made this move. So maybe
13:16the bond market knows something that none of us do, but it was a very noticeable reversal from
13:22the highs of Friday. So in our last podcast, you talked about how
13:26the mortgage spreads, which have been the superhero for the 2024 and 2020, I mean, 2025
13:32and 2026 had started to show, right? They were getting worse a little bit last week. Where are
13:38they now? Any big movement there? It's still super great. A lot of people who saw the spreads get
13:46worse didn't realize that the spreads were getting worse in February. And again, 10-year yield was falling
13:51lower, spreads got worse. It compresses the volatility to the downside just as much as it does.
13:55But then now, depending on who you quote on a 30-year mortgage rate, spreads are 18% to 23
14:03% or
14:04basis points higher than the lows of this year. And you and I talked about this very time. When the
14:10mortgage-backed security announcement was made, I thought it was more of a defensive move
14:14than an offensive move. So when we're talking about the spreads getting worse, still today,
14:19even today, all mortgage rates would have been above 7% the last three years, 2025, 2024,
14:282023. So the fact that we're under that 6.64 level still, hug a mortgage spread, still today,
14:35it is the superhero of the housing market. And because of that, the data has still held up. Now,
14:41if we're above 7.25 or 7.5 or 7.6, housing data just doesn't work as well. And one
14:50of the benefits
14:50the last two years is that price growth has slowed down so much that wages have offset or are running
14:56higher than home prices that affordability got a little bit better. So it's this natural supply and
15:00demand equilibrium with affordability. And affordability does... So many people just forget
15:06about the wage aspect and the household formation aspect of housing demand, that they just look at
15:11price and rates and don't realize that if price growth is slowed down in wages, affordability,
15:18that in itself gets a little bit better. And that's one of the reasons I thought housing demand
15:22held up okay early 2025, even though rates were high 6s, low 7s. So given all that, what's the main
15:30thing you're looking for on the jobs report this week? By the way, do you know what one of our
15:34fans
15:35gave us? You know, since we do our paper, rock, scissors games a lot, somebody gave us a towel,
15:41paper, rock, scissors, but they use cats as, you know, the paws version. Like little cat paws?
15:48Little cat paws. And then the last one, which reminds me of Puff, my main coon cat, you know,
15:53where it's just, you know, paper, rock, scissors with super claws, you know, you know, getting into you.
15:58So we love our fans. They are very, very creative. But to answer your question about jobs,
16:05I really, really want to see, you know, if jobs only has like a 40 or 50,000 increase,
16:14what does the unemployment rate do? Because again, we're running off of the Federal Reserve basically
16:20telling us is that the labor force growth is the main reason. That if the labor force growth was
16:25bigger, the jobs reports would be bigger. I don't agree with that premise because some of the sectors
16:32of the economy that have been falling have been falling during the quote unquote better labor force
16:37growth years. But in this case, I really want to see how the bond market reacts to a jobs Friday
16:45if
16:46we create 50,000 jobs, but the unemployment rate goes up and the unemployment rate goes up because the
16:53labor force grew. Well, it's unemployment rate. And you know, what does the Fed say now? Well,
16:58they said, there's no, there's nobody looking for work, you know, so we're getting to that very dicey
17:03where I think we overanalyze the jobs that it's just the slowest job growth in the 21st century.
17:09We just call a spade a spade. You know, it isn't like, you know, manufacturing is booming. It isn't
17:15like residential construction, you know, jobs are booming anymore. You know, I mean, really the AI data
17:20centers is holding up construction, but really we only have two sectors of the economy that are growing
17:25jobs for like 14 months. And, you know, some of the, some of the weakness in the last,
17:31you know, there's a strike or whether, you know, all that, you know, the Fed really discounted it,
17:35but if it is another negative, I wonder if they, if they can't come back, you know, and Powell will
17:41say, you know, Hey, let's, cause I think Powell's going to be here for a while. I don't think, I
17:46don't
17:46think Powell's as long as this conflict goes on or inflation is, I think they're just going to wait,
17:52wait for a better spot to get. We've heard zero on Kevin, from Kevin Walsh. We've heard zero about
17:57him lately because they've locked him up in a cabin. They took away his cell phone. They didn't
18:02took away his laptop. And they said, you can't talk to anybody, right? You have to keep Kevin
18:07Walsh away from the media, away from Congress, away from, you cannot have him talk during this
18:11period of time. You know, Stefan Meier came out today and said, you know, I don't see any inflation
18:16pressures because of oil prices, you know? So it's, it's one of these things where Trump has his people
18:21in the Fed and then there's the Fed people that look at him and Trump's people go, holy,
18:25what are y'all doing here? But I really want to see how the bond market reacts to this labor
18:31report
18:31with this concern. Cause there is, there is this, there is a talk always that, you know,
18:38if the 10 year yield is going against oil, then the 10 year yield is telling you growth is going
18:42to get
18:42hit. You know, that's, that's a very, very fair statement where I always believe 65 to 75% of where
18:50the 10 year yield and mortgage risk range is still fed policy, you know, then you add the spreads to
18:55it. So it's just so far that channel just worked this year, both on the downside and the upside.
19:02But of course the upside is more related to the conflict in energy prices. And, uh, Powell talked
19:08about that today where he said, it's a one-time price off with tariffs, but now, you know, we're
19:12dealing with an energy shock and we, we don't want to, you know, you, you, you're top of the mind
19:18saying,
19:18you don't want to compound a problem by raising rates when you have a supply shock where people,
19:24you know, are already getting hit, but, uh, you don't want to, you know, cut rates to make that
19:30inflation a little bit more sticky. So there's a lot going on this week, of course, with the conflict
19:35with the 10 year yield jobs reports, everything. So kind of buckle up and, uh, uh, keep an eye on
19:41that
19:414.46, 4.48 level on a 10 year yield. And see if you get any, uh, ship start to
19:47flow, uh,
19:47in the straight of home moves. Lots to keep our eye on. I have to say for those of, uh,
19:52you who are
19:52watching this on YouTube, uh, Logan is giving very much like Sean Connery in hunt for red October
19:59vibes. You've got a black turtleneck and just your hair, like totally giving like 90 Sean Connery
20:04vibes. Very fun. I'm not going to try to do my Sean Connery impersonation now, but that was something
20:09I did in the 1990s. So thank you so much, Sarah Wheeler. I really appreciate that notice of my
20:17turtleneck back in the days. It was pretty good. I think it was pretty good. All right. Thank you so
20:22much for keeping us, uh, informed and entertained. We will talk to you soon. Pleasure.
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